Cliff Notes Mbac6060

Chapter 3- Analysis of Financial Statements Liquidity Ratios (measure of firms skill 2 pay off shortterm obligations w/o relying on sale of inventory): certain symmetry = modern assets/current liabilities (a caller in trouble will pay its bills slowly and its CR will fall). Quick/acid test ratio =(Current assets Inventories)/Current liabilities. Asset Management Ratios: Inventory swage ratio = sales/Inventories (in times/year) ( gritty inventory adds to NOWC, which sinks FCF). Days Sales Outstanding (DSO) = Receivables/ fairish Sales per day = Receivables/(Annual Sales/365) (aka Average Collection Period, ACP) (in days) (high DSO= high account receivables which adds to NOWC & reduces FCF). Fixed assets turnover ratio = Sales/ winnings fixed assets (problem with inflation. Old firm purchased assets @ lower prices vs new firm). innate assets turnover ratio = Sales/Total assets. If fixed assets turnover is much higher than summarize assets turnover then your current assets are underperforming. Debt Management Ratios: How firm is financed: Debt ratio = Total liabilities/total assets. Debt to equity ratio: Total liabilities/(total assets total liabilities). grocery debt ratio: Total liabilities/(total liabilities + Market value of equity).

Ability to pay pertain: Times-Interest-Earned (TIE) ratio: EBIT/Interest expense (Shortcomings: 1. Only considers interest charges & ignores reduce debt on schedule and lease payments. 2. EBIT is not all cashflow on tap(predicate) 2 service debt, esp if firm has high depre & amort. So use EBITDA coverage ratio) Ability 2 service debt: EBITDA insurance coverage Ratio: (EBITDA + lease payments)/(Interest + Principal payments + demand payments). Businesses in uniform industry tend to gravitate towards same debt and capital structures. Lease payments drag down EBITDA Coverage. (short time lenders 1, overvalued. Value stocks: Low foodstuff to book ratios. Growth Stocks: high market to book values. Market captitalization= mkt value of common equity Enterprise... If you want to get a affluent essay, order it on our website: Orderessay

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