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Unformatted text preview: and how much money it can have available in short notice if the need arises. The Current ratio expresses the relation between current assets and current liabilities. We use the following formula to compute it: Current Ratio = Current Assets/Current Liabilities A positive current ratio means that if liquidated the amount of cash earned would be enough to cover the company’s immediate liabilities. Another ratio that I have selected is the Net Operating Asset Turnover (NOAT) NOAT = Revenues/Average NOA Similarly to the ROE the NOAT illustrates the company’s productivity. The NOAT particularly focuses on how much profit is generated by the company’s net operating assets (Easton et al,2010). A high NOAT means a solid performance managing the company’s assets. Easton, P.; Halsey, R. F.; McAnally, M. L.; Hartgraves,A. & Morse, W., (2010). Financial & Managerial Accounting for MBAs . Canada: Cambridge Business Publishers....
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This note was uploaded on 04/06/2012 for the course FINANCE 410 taught by Professor N/a during the Spring '09 term at AIU Online.
- Spring '09