BU121 Lecture Notes - Asset, Cash Flow Statement, Current Asset
Document Summary
Week 7 february 25th march 1st. Unit 3 managing the firm"s finances, pages 196-228. Principle 1: real human, and financial capital must be rented" from owners. Principle 5: a venture"s financial objective is to increase value. Different analytical measures are important to different users at different stages . Liquidity ability to meet short term obligations. Conversion period time to convert an asset into cash. Leverage implications relating to the use of debt. Cross-sectional analysis compare to specific firms. How quickly a venture burns through"/uses cash. Cash burn = the cash a venture expends on its operating and financing expenses and its investments in assets. = cash operating expenses + interest + taxes. How quickly a venture builds cash balances through collections on sales. The ability of the venture to maintain a build rate high enough to meet its obligations as they come due. Cash build = what the venture receives on its sales.
