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Flashcards in Finanical ratios Deck (9)
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1

Current ratio

CA / CL
should greater than 1
if low, then spells trouble and indicates short term solvency problem

2

cash ratio

cash + market securities / cl
too much cash is not good becuase means executives suit does not know what to do with money

3

inventory turnover

sales / inventory
multiple

4

days sales outstanding

AR / (Annual sales/Sales)
is its high, then comp won't get payments, so eps is high
cash is low bring could bring comp down

5

how to fix high days sales outstanding

sell the ar
relook your credit terms, it may be too linent
give a discount as incentive
low prices than competitor

6

fixed asset turnover

sales/net fixed assets
multiple

7

net fixed assets

assets - depr

8

which has higher stock price old company or new company??

new comp because more assets that are new and new products, so larger net fixed assets with no depr yet so fixed asset turnover is lower.
good asset means more productivity greater margins and competitive pricing

9

TATO

SALES / total assets
higher the better