2.2. The Definition of Ratio
Active Ratios
Receivables turnover
. Receivable Turnover Ratio is one of the accounting activity ratios, a financial ratio. This ratio measures the number of times, on average, receivables (e.g. Accounts Receivable) are collected during the period. A popular variant of the receivables turnover ratio is to convert it into an Average Collect
the net cash flow in the CFS from one year to the next should equal the increase or decrease of cash between the two consecutive balance sheets that apply to the period that the cash flow statement covers.
e. Check the main accounting policies of your company. Choose one interesting/doubtful accounting policy. Then, comment on the chosen accounting policy.
Ratio 1732.3/974.8 1.77 1842/844.5 2.18
Times Interest Cover 339.4/57.3 5.92 354.2/67.1 5.27
3. Working Capital Management & Short-Term Liquidity
Average Collection Period (130/2537.4)*365 18.70 (139.3/2454.7)*365 20.71
Average Payment Period (127/1643.7)*365 28.20 (129.5/1538)*365 30.73
Days Inventory (31.3/1546)*365 7.38 (37.7/1442)*365 9.54
Current Ratio 370.6/482.3 0.76 404.0/456.0 0.88
receivables as ordinary receivables. Since they are incorrectly acknowledging more account receivables than the actual amount of account receivables that they should, their shareholder’s equity became higher (due to an increase in net income), and thus the debt-to-equity ratio as well as the liquidity ratios of the company improved. These, in consequence, provide inaccurate information to the
2.1.4 Inventory Turnover ratio
Inventory Turnover ratio= Cost of goods sold / Average Inventory
Inventory Turnover ratio showing how many times a company's inventory is sold and replaced over a period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying.
Commonly if this ratio high, company can decrease stor