BUSI 2150U Lecture Notes - Lecture 5: Gross Profit, Quick Ratio, Ratia
This preview shows half of the first page. to view the full 2 pages of the document.
OperatingCash flow ¿current Liabilitiesratio=¿Operations ¿
Note that Average current Liabilities = (Beginning liabilities + Ending Liabilities) / 2
This ratio indicates whether an entity is generating enough cash from operations to meet its current
liabilities. A ratio less than one indicates that CFO isn't adequate to meet current liabilities and cash may
have to be obtained from other sources or the rate of cash expenditure slowed.
Free cash flow=CFO – Capital Expenditures
Capital expenditure is the money spent to purchase capital assets
Free cash flow is the cash available after capital expenditures have been made. Free cash flow is
available for use at management's discretion; for example, to acquire new companies, expand, reduce
debt, or buy back shares.
Marketable securities = Marketable securities are investments such as shares and debt of public
companies (particularly investments in public companies).
Accounts receivables turnover ratio=Total Sales
Average accounts receivables =(beginning acc. Receivables + Ending acc. Receivables) / 2
Average collection period of Acc . Receivables=365
Acc . Receivables turn
Average cost of product =
Units x price
Units x Price
Units x Price
Average inventory = (Beginning Inventory + Ending Inventory) / 2
You're Reading a Preview
Unlock to view full version