ARBUS200 Lecture Notes - Lecture 1: Inventory Turnover, Net Income, Debt Ratio
Document Summary
Financing just when you need it the most, it"s the most difficult to obtain. Venture capital is very selective, demands outsize returns risk means remand for equity risk/reward relationship. Good track record twice the success rate. Willing to take (cid:494)political(cid:495) risks: initial public offering (i. p. o) where capital is accessed in the stick market. Risky but enhances credibility and net worth if successful. At every stage of venture, a storing desire to know its value both by founders and investors. Efficiency ratios operating ratios: debt ratio = total debt or liabilities/total assets, debt to net work (equity) ratio = total debt or liabilities/tangible net worth, times interest earned ratio = ebit + total interest/total interests expense. Established firms often have market capitalization; number of shares outstanding x price per share or book value = share holders equity. Financial ratios used extensively to determine relative health firm.