D076 unit 4 - Study guides, Class notes & Summaries

liquidity ratio - is a measure of not only how much cash you have but also how easily you can convert short-term assets into cash. activity ratio - the firm's operational efficiency and profitability. activity ratio - efficiency ratio leverage ratio - financing ratios or solvency ratios leverage ratio - how the firm is financed. profitability ratio - based on either sales or asset investment market ratios - used to evaluate the current share price of a public firm's stock. liquidity ra...

Firm A has an average collection period of 67 days, and the industry norm is 40 days. What can the firm do in order to be competitive with accounts receivable management in the industry? - Tighten the credit standards for its customers. MiniCo recently spun off of BigCo. Both companies have the same leverage and asset turnover ratios, but MiniCo is underperforming on its return on equity to shareholders. If MiniCo would like to improve its return on equity, which action would help? - Reduce...

Firm A has an average collection period of 67 days, and the industry norm is 40 days. What can the firm do in order to be competitive with accounts receivable management in the industry? - Tighten the credit standards for its customers. MiniCo recently spun off of BigCo. Both companies have the same leverage and asset turnover ratios, but MiniCo is underperforming on its return on equity to shareholders. If MiniCo would like to improve its return on equity, which action would help? - Reduce...

Accounts Receivable Turnover - An activity ratio found by credit sales divided by accounts receivable. Activity Ratios - A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Average Collection Period - An activity ratio found by the number of days in a year (365) divided by AR turnover. Benchmarking - The process of completing a financial analysis to compare a firm's financial perform...

4 Reasons Ratios are Useful - 1 - Standardization 2 - Flexibility 3 - Focus 4 - Evaluation Benchmarking - The process of completing a financial analysis and comparing a firm's performance to that of other similar firms. Trend Analysis - Comparing a firm's ratios across time Cross-Sectional Analysis - Compares a firm's financial ratios to other firms' ratios or industry averages Seasonal Firms - Firms whose performance varies according to the season. Which statement below is an exam...

4 Reasons Ratios are Useful - 1 - Standardization 2 - Flexibility 3 - Focus 4 - Evaluation Benchmarking - The process of completing a financial analysis and comparing a firm's performance to that of other similar firms. Trend Analysis - Comparing a firm's ratios across time Cross-Sectional Analysis - Compares a firm's financial ratios to other firms' ratios or industry averages Seasonal Firms - Firms whose performance varies according to the season. Which statement below is an exam...

4 Reasons Ratios are Useful - 1 - Standardization 2 - Flexibility 3 - Focus 4 - Evaluation Benchmarking - The process of completing a financial analysis and comparing a firm's performance to that of other similar firms. Trend Analysis - Comparing a firm's ratios across time Cross-Sectional Analysis - Compares a firm's financial ratios to other firms' ratios or industry averages Seasonal Firms - Firms whose performance varies according to the season. Which statement below is an exam...

4 Reasons Ratios are Useful - 1 - Standardization 2 - Flexibility 3 - Focus 4 - Evaluation Benchmarking - The process of completing a financial analysis and comparing a firm's performance to that of other similar firms. Trend Analysis - Comparing a firm's ratios across time Cross-Sectional Analysis - Compares a firm's financial ratios to other firms' ratios or industry averages Seasonal Firms - Firms whose performance varies according to the season. Which statement below is an exam...

Accounts Receivable Turnover - An activity ratio found by credit sales divided by accounts receivable. Activity Ratios - A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Average Collection Period - An activity ratio found by the number of days in a year (365) divided by AR turnover. Benchmarking - The process of completing a financial analysis to compare a firm's financial perform...