Average Collection Period Days x average amount of accounts receivablesCredit

Average collection period days x average amount of

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Average Collection Period= (Days x average amount of accounts receivables)/Credit Sales=(7 x 821)/2,737=5,747/2,737=2.099Average Collection Period=3 DaysThe lower this number is the better. This means that the company is collectingpayments faster.Debt Equity Ratio= total long term debt /total equity=4,295/2,118Debt Equity Ratio=2.02 timesThis number is used to measure the company’s financial leverage. The higher the ratiomeans that the company has been aggressive in financing.Debt Ratio=Total liabilities /total asset=7,751/9,869Debt Ratio=78.53%This number measures leverage as well. The higher the ratio means that company isat more financial risk.Time interest earned ratio= Earnings before interest and tax/ interest expense=2,118/385Time interest earned ratio=5.501This number represents that the company has strong earnings or lower than averageinterest rates.Fixed asset turn over ratio= net sales/total fixed asset=28,613/5,924Fixed asset turn over ratio=4.83 timesThis ratio means that this company is using their fixed assets to generate revenue.
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  • Fall '16
  • ghassan
  • Finance, Balance Sheet, Financial Ratio, Fundamentals Of Healthcare, Second Edition, Generally Accepted Accounting Principles, net assets

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