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Unformatted text preview: turned into cash (can they meet short term obligations?) Current Ratio: Current Assets/Current Liabilities (want bigger than 1) 9491/6543=1.45 1.48 Acid Test: (stricter than current) 1.27 1.3 Efficiency Ratios: how effectively management runs the firm ( short term ) Days of Inventory= Inventories/cost of goods sold/365 400/25445/365=5.7 or 6 7 Days Receivable= Accounts Receivable / (revenue/365) 33 40 How long it takes to collect Days Payable How long it takes to Pay Financial Leverage: how much of long term assets are funded by debt vs. equity Long Term Debt to Equity=LT Debt/Equity 509/5622=0.09 0.10 Competitors have more debt EBIT/Interest 57.7 68 Profitability ROE= net income/common equity38 31 Size-Up External and Internal Econ/ind Op mgt, marketing, financial What do we tell Dell? 1yr eps looks good 3yr eps tumbles downward Long term cash flows drives stock price...
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- Fall '08
- Corporate Finance