MGAB01H3 Lecture Notes - Lecture 15: Asset Turnover, Accrual, Retained Earnings
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MGAB01H3 Full Course Notes
Operating (cash to cash) cycle : the time takes for company to pay $ to suppliers, sells goods & services to customers, & collect cash from customers. Long term objective for business: turn $ to more : must be generated from operations not borrowing or selling nca. Depends on nature of business: sun-rype relatively short car dealership $ after selling car. Shorten o. c by incentives to buy sooner/ pay faster= improve $ flows= > n. i=faster growth: purchase more assets/inventory for growth, repay debt w/ excess $, dis to owners. 3 major sections: results of continuing op, resulting of discontinued op. Revenues: increase in assets or settlements of liab from ongoing operations: deferred revenue= promise to provide goods/service in future (recognized when provided) Expenses= decreases in assets or increase in liabilities to generate revenues during period. Expenditure= outflow of cash for any purpose; expense: when asset used or amt incurred to generate rev (electricity: not all expend.