ARBUS200 Lecture Notes - Lecture 1: Inventory Turnover, Net Income, Debt Ratio

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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.

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