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FNT1_Chap14 (13) - Horngren Mozilla Firefox file Edit...

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Unformatted text preview: ': Horngren - Mozilla Firefox file Edit flew Higtory fiookmarks Iools flelp la http1#wpscmsbearsoncmg.tomlwpslmedialobjettslé?16l6877765i'hha08_f|ash_main.html?thapter=null&page=745&anchory=nul|&pstart=null&fin ' a'JTQQZS P I maeeeeuht'svmwéflamrswereetmm Q I [j Horngren Contents } ANCIAL STATEWEIT ANALYSIS Mike and Roberta Robinson operate a financial-services firm. They manage other people’s money and do most of their own financial—statement analysis. How do they measure companies’ ability to pay bills, sell inventory, collect receivables, and so um? They use the standard ratios discussed in this Chapter. Ratio Computation Information Provided Measrtrt‘rrg ability to pay current liabilities: 1. Current ratio _ _ Measures ability to pay current liabilities with Cunt-n: assets ——— current assets Currentllahrhties 2. Acid—test (quick) Show; ability to pay all current liabilities if the},r C-"[ + Short-mm __-Nercurrent ratio . , .. + .. . _ came due immediately - memos receivables Current liabilities Avieasmt'ng ability to sell inventory and collect receivables: 3. Inventor turnover - - - . Indicates salabilit of inventor irhe number of y Coat ofgmds..eold . Y 11 . y _ é times a company Se 5 1‘5 average Inventory Average luYEnIGl'}? d , - urlng a year 4. Accounts receivable Net] .1 Measures ability to collect cash from customers turnover .— AW-netaomuntsrecmable Shows how many days' sales remain in Accounts receivable—how many days it takes to collect the 5. Days“ sales in receivables W 911.: t'laii‘i 5.3398 average level of receivables I: V I'm lfilfi @sz‘ug O- ,. ...
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