Active Ratios + Variation of Analysis

Question 1

Receivable Turnover

Answer 1

receivables turnove= annual sales / average receivables

Question 2

days of sales outstanding

Answer 2

days of sales outstanding = 365 / receivable turnover

Question 3

inventory turnover

Answer 3

inventory turnover = cost of goods sold / average inventory

Question 4

days of inventory on hand

Answer 4

days of inventory on hand = 354 / inventory turnover

Question 5

payables turnover

Answer 5

payables turnover = purchases / average trade payables

Question 6

number of days of payables

Answer 6

number of days of payables = 365 / payables turnover ratio

Question 7

total asset turnover

Answer 7

total asset turnover = revenue/ average total assets

Question 8

fixed asset turnover

Answer 8

fixed asset turnover = revenue / average net fixed assets

Question 9

working capital turnover

Answer 9

working capital turnover = revenue / average working capital

Question 10

Sensitivity analysis

Answer 10

Sensitivity analysis is based on “what if” questions such as: What will be the effect on net income if sales increase by 3% rather than the estimated 5%?

Question 11

Scenario analysis

Answer 11

Scenario analysis is based on specific scenarios (a specific set of outcomes for key variables) and will also yield a range of values for financial statement items.

Question 12

Simulation

Answer 12

Simulation is a technique in which probability distributions for key variables are selected and a computer is used to generate a distribution of values for outcomes based on repeated random selection of values for the key variables.