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FINANCIAL ACCOUNTING EXAM REVIEW.docx

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Department
Administration
Course
ADM1340
Professor
All Professors
Semester
Fall

Description
FINANCIAL ACCOUNTING EXAM REVIEWCHAPTER 13RatiosGroup 1 Ability to pay off current liabilities a Current Ratio Current Assets Current Liabilities b Acid test ratio AKA quick ratio cashtemp Investmentsreceivables current liabilitiesc Working capital Current AssetsCurrent LiabilitiesWC Group 2 Ability to sell of Receivables and inventory turnover ratios a Accounts receivable turnover P 259 Net credit salesAverage Accounts Receivables Measures ability to collect cash from credit customers b days sales in receivables avg Accounts receivable one day sales i Net sales 365x per day ii Avg ARx per dayShows how many days it takes to collect AR c Inventory turnover ratio COGS Average inventoryIndicates ability to sell inventory The number of times a year it sell inventory Group 3 Ability to pay long term Debt a Debt ratio Total liabilities Total AssetsMeasuresof assets financed with debt b Times interest earned ratio income from operations interest expense Measures the number of times operating income can cover interest expense p417Group 4profitability ratiosa gross profit ratioGross profit net sales revenuesGPsales COGS how much profit perb ROA return on assetsNet incomeinterest expense if applicableaverage total assets measures how profitably a company uses its assets
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