Formulas_Chapter17-1

Formulas_Chapter17-1 - Summary of Analytical Measures...

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Summary of Analytical Measures Method of Computation Use Solvency measures: Working capital Current assets – Current liabilities To indicate the ability to meet currently maturing obligations Current ratio Current assets Current liabilities Acid-test ratio Quick assets Current liabilities To indicate instant debt- paying ability Accounts receivable turnover Net sales on account Average accounts receivable To assess the efficiency in collecting receivables and in the management of credit Number of day’s sales in receivables Accounts receivable, end of year Average daily sales on account Inventory turnover Cost of good sold Average inventory To assess the efficiency in the management of inventory Number of day’s sales in inventory Inventory, end of year Average daily cost of good sold Ratio of fixed assets to long-term liabilities Fixed assets (net) Long-term liabilities To indicate the margin of safety to long-term creditors Ratio of liabilities to stockholders’ equity Total liabilities
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This note was uploaded on 11/01/2010 for the course ACCT 101a taught by Professor Aa during the Spring '10 term at Ohlone.

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Formulas_Chapter17-1 - Summary of Analytical Measures...

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