financial management

financial management - =INCOME FROM OPERATIONS [-interest...

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STEPS FOR A BASIC CASH FLOW ANALYSIS 1. Forecast sales (steady, up, or down) 2. Project changes in anticipated cash inflows (as a result of changes) 3. Project anticipated cash outflows (as a result of changes) 4. Project net cash flows by combining anticipated cash inflows and outflows. PARTS OF A BASIC BALANCE SHEET (ASSETS=LIABILITIES+OWNER’S EQUITY) 1.ASSETS a. current assets (cash, short-term investment, market securities, accounts receivables=, etc.) b. fixed assets (land, buildings, machinery, equipment, etc.) 2.LIABILITIES a. current liabilities (accounts payable, notes payable, taxes payable, etc.) b. long-term liabilities (long-term debt, deffered income taxes, etc.) 3.OWNER’S PROPERTY a. preffered stock and common stock b. additional paid-in capital c. retained earnings BASIC INCOME STATEMENT SALES REVENUE [- sales returns and allowances][+other income] =NET REVENUE [- cost of goods sold (beginning inventory, costs of goods purchased, ending inventory)] =GROSS PROFIT [-total operating expenses (selling, general, and administrative expenses)]
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Unformatted text preview: =INCOME FROM OPERATIONS [-interest expense] =PRETAX INCOME [-income taxes] =NET INCOME LIQUIDITY (higher is better)(higher is better) CURRENT RATIO= current assets/current liabilities QUICK (ACID TEST) RATIO= (current assets-inventories)/current liabilities LEVERAGE (lower is better)(higher is better) DEBT TO EQUITY= total liabilities/total equity DEBT COVERAGE= (net profit+noncash expense)/debt EFFICIENCY (higher is better)(-) INVENTORY TURNOVER=cost of goods sold/average value of inventory AVERAGE COLLECTIONS PERIOD= accounts receivable/(annual net credit sales/365) *if credit is net 30 days, under 45 is good. under 15 days longer than credit terms good* PROFITABILITY (higher is better)(higher is better) GROSS PROFIT MARGIN= gross profit/total sales RETURN ON EQUITY= net income/owners equity--------------------------------------------------------------------------------------------------------------------...
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This note was uploaded on 04/19/2008 for the course BMGT 2311 taught by Professor Pond during the Fall '07 term at Collin College.

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financial management - =INCOME FROM OPERATIONS [-interest...

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