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Unformatted text preview: Danielle & Melissa’s Midterm Review: I. Bookkeeping: Balance Sheet: Revenue (Cost of goods sold)/ (Operating Expenses) Gross Margin/ Net Revenue (SG&A) Net Income/ Profit Dividends Declared Balance Sheet: Total Assets Total Debt: Liabilities & Equity Cash W/P A/R A/P INV N/P PPDE LTD PPE R/E PIC Total: Income Statement Accrual I/S see R/E column in analysis of transaction Cash I/S see Cash column in analysis of transaction Revenues/ Sales (COGS)/ (Expenses) Gross Margin/ Net Revenue/ Operating Margin (SG & A) Profit/ Net Income/ Net Earning II. Financial Analysis Income Statement Ratios: (Profitability ratios) 1. Return on Sales = Profit Revenue Higher the ratios the more profit you are making. 2. GM = Rev – Cogs Rev Measure operating profitability. Balance Sheet Ratios: 1. Current Ratio = CA CL Higher the current ratio, the more assurance the creditor has about being paid in full and on time. (Good if > 2) 2. A/R days in Aging = Current accounts receivable x 365 days Annual sales Bad if increases because it is a use of cash. How long on average it takes for clients to pay their bills. Bad if increases because it is a use of cash....
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This note was uploaded on 03/27/2012 for the course CE 502 taught by Professor Jr,f during the Fall '08 term at USC.
- Fall '08