Chp6 - Ratios plus Chapter 6: Time Value of Money Anthony...

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Ratios plus Chapter 6: Time Value of Money Anthony Meder, Ph.D. October 13, 2011
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Ratios Activity ratios Asset turnover = net sales / avg. total assets Receivables turnover= net sales / avg. total A.R. Avg. Collection period = 365/receivables turnover Inventory turnover = COGS / average inventory Average days in inventory = 365/inventory turn.
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Ratios from chapter 3 Liquidity Ratios Current ratio= current assets/current liabilities Acid-test (quick ratio)= (cash + short-term investments + A/R)/current liabilities Financing Ratios Debt to equity= total liabilities/shrholders’ equity Times interest earned (TIE) = (net income + interest expense + taxes) / interest expense
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Sheet ACCOUNT 2010 2009 A/R (net of allowance for doubtful accounts of 600 and 800 respectively) 12,000 16,000 Inventory 36,000 30,000 Total current assets 78,000 72,000 Total assets 150,000 138,000 Total current liabilities 52,000 36,000 Total liabilities
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This note was uploaded on 03/12/2012 for the course ACCT 211 taught by Professor Kamlet during the Spring '08 term at Binghamton.

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Chp6 - Ratios plus Chapter 6: Time Value of Money Anthony...

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