Financial Management Chapter 3 What is the receivables turnover? (Round your answer to 2 decimal places (e.g.‚ 32.16).) | Receivables turnover | times | Requirement 2: | The days’ sales in receivables? (Round your answer to 2 decimal places (e.g.‚ 32.16).) | Days’ sales in receivables | days | Requirement 3: | How long did it take on average for credit customers to pay off their accounts during the past year? (Round your answer to 2 decimal places (e.g.‚ 32.16)
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Ratio Analysis Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a firm’s financial performance in several key areas. The ratios are categorized as Short-term Solvency Ratios‚ Debt Management Ratios‚ Asset Management Ratios‚ Profitability Ratios‚ and Market Value Ratios. Ratio Analysis as a tool possesses several important features. The data‚ which are provided by financial statements‚ are readily available. The computation of ratios facilitates
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company Inventory turnover An activity ratio calculated as revenue divided by inventory. Rio Tinto PLC’s inventory turnover deteriorated from 2010 to 2011 and from 2011 to 2012. Receivables turnover An activity ratio equal to revenue divided by receivables. Rio Tinto PLC’s receivables turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012. Payables turnover An activity ratio calculated as revenue divided by payables. Rio Tinto PLC’s payables turnover declined from 2010
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2. 1 Current Ratio Table 1: Current Ratio of Mattel in 2010‚ 2011 and 2012($ thousands) |Year |Current Ratio =Current Assets/Current Liabilities | |2010 |$3‚226‚610/$1‚350‚282=2.39 | |2011 |$3‚443‚707/$1‚038‚928=3.31 | |2012
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Empirical Study on Liquidity Management of Fu-Wang Ceramic Industry Limited Origin of the Report As a part of our study curriculum in BBA course‚ we have been assigned to conduct a study on “Working Capital Management (F-402)‚ by Ms. Sheikh Tanzila Deepty. The required study suggests the analysis of liquidity management of a company in Bangladesh. We have been assigned Fu-Wang Ceramic Industry Limited for the Study. Purpose of Report * To achieve deep knowledge about liquidity management
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Full-line and majority of specialty store formats was approximately 55.1% and 55.6% for fiscal years 1997 and 1996. This can also been proved in balance sheet of Sears: the credit card receivables were 20956 million and 20104 million in fiscal year 1997 and 1996 respectively. Comparatively‚ Wal-Mart had a receivables balance of 976 million and 845 million respectively in fiscal year 1997 and 1996. 2. Cost-effective and effective use of assets in Wal-mart While the two companies have the similar
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Profitability Ratios Profitability Ratios attempt to measure the firm’s success in generating income. These ratios reflect the combined effects of the firm’s asset and debt management. Profit Margin The Profit Margin indicates the dollars in income that the firm earns on each dollar of sales. This ratio is calculated by dividing Net Income by Sales. Return on Assets (ROA) and Return on Equity (ROE) The Return on Assets Ratio indicates the dollars in income earned by the firm on its assets
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coverage depends on the type of business‚ the components of its current assets‚ and the ability of the company to generate cash from its receivables and by selling inventory. Acid-test ratio. The acid-test ratio is also called the quick ratio. Quick assets are defined as cash‚ marketable (or short-term) securities‚ and accounts receivable and notes receivable‚ net of the allowances for doubtful accounts. These assets are considered to be very liquid (easy to obtain cash from the assets) and therefore
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from its receivables and by selling inventories. ACID-TEST RATIOS Quick Asset = Current Assets - Inventories Acid-Test Ratio = Quick Assets /Current Liabilities | | 2010$000 | 2009$000 | Current Assets | 89‚725 | 67‚653 | Inventories | (26‚218) | (22‚605) | Quick Assets | 63‚507 | 45‚048 | Current Liabilities | 82‚832 | 59‚320 | | 0.8 : 1 | 0.8 : 1 | The traditional rule of thumb for this ratio has been 1:1. Anything below this level requires further analysis of receivables to understand
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potentially overstated as possibly recorded at more than net realizable value Overstated inventory account Poor ski environment Economic downturns can create circumstances that require write-offs of receivables or inventory‚ thus accounts receivable could be potentially overstated. Overstated receivable account Poor internal control Potential for misappropriation of assets. Overstated current asset. Government policies Inventory potentially overstated as possibly recorded at more than net realizable
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