BU121 Study Guide - Asset, Current Liability, Cash Flow
Document Summary
Looking to see if a company is profitable and if they are good with their money. Government, competitors, creditor, investors, and employees look at these finances. Period inventory to sale + sale to cash. Inventory to sale + sale to cash . The higher it is, the more you rely on credit. Want to be as close to 0 as possible so you pay your bills on time keep cash flow. Formula average current assets average current liabilities (average current assets . Want close to 0 how long it takes for you. How quickly your assets can turn to cash excluding inventory. How much money you have to work with after you pay your debt. How long it takes for your inventory to be sold days to collect that money. You have to line up with when you owe money so you have cash flow.
