MGCR 211 Lecture Notes - Lecture 15: Current Liability, Inventory Turnover, Operating Cash Flow

• School: McGill University
• Department: Management Core
• Course: MGCR 211
• Professor: Walter Moschella

Document Summary

Prospective analysis uses past trends to forecast future outcomes. Time-series analysis looks for patterns in data over time periods. Ratios can often be calculated with different methods. Include performance, short-term liquidity, activity, solvency and equity ratios. Gross profit = sales cost of goods. Return on equity = (net income preferred dividends) / average common shareholders" equity. Return on assets = income before interest / average total assets. = net income + interest expense (tax rate x interest expense)] / average total assets. = net income + [interest expense x (1-tax rate)] / average total assets. Accounts receivable turnover = sales on account / average accounts receivable. Days to collect = 365 / accounts receivable turnover. Inventory turnover = cost of goods sold / average inventory. Days inventory held = 365 / inventory turnover. Days to pay = 365 / accounts payable turnover. Debt to equity = total liabilities / total shareholders" equity.