FIN%204260%20Chapter%202

FIN%204260%20Chapter%202 - time without undue cost A firm...

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Short-Term Financial Management Chapter 2 - Solvency, Liquidity & Financial Flexibility Prepared by Patty Robertson May not be used without permission
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Part I - Introduction to Liquidity Chap ters Cove red Chapter 1 The Role of Working Capital Chapter 2 Solvency, Liquidity & Financial Flexibility Chapter 3 Valuation 2
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Solvency, Liquidity & Financial Flexibility Chapter 2 Agenda 3 Sales A/R Cash Inv Be able to differentiate between solvency and liquidity ratios. Conduct an analysis of a firm’s
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Cash Flow Timeline 4 The cash conve rsion perio d is the time betwe en The firm is a system of cash flows. These cash flows are unsynchronized and uncertain.
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Solvency v. Liquidity 5 A firm is solvent when its assets exceed its liabilities. This accounting measure is based on book, not market values. A firm is liquid when it can pay its bills on
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Unformatted text preview: time without undue cost. A firm has financial flexibility when it’s financial policies are consistent with Short-Term Financial Condition 6 Financial analysis is an assessment of a firm’s past, present, and future financial condition. In Chapter 1, we discussed financial statements . In this chapter, we will examine: Liquidity and solvency ratios . Other methods to analyze liquidity. Solvency Measures 7 A firm has resources ; how well it converts those resources into cash flows can be explained with ratio analysis . Ratio analysis is conducted from information on the firm’s financial statements. It can explain performance and how it has changed over time. Sample Common-Size B. S. 8 Sample Common-Size I. S. 9...
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This note was uploaded on 01/24/2012 for the course FIN 4260 taught by Professor Victorwakeling during the Spring '12 term at Kennesaw.

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FIN%204260%20Chapter%202 - time without undue cost A firm...

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