RSM219H1 Final: Basic Accounting Ratios
7
RSM219H1 Full Course Notes
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Ability of the business to pay its debt in a normal course of the year. Ability of the business to pay its debt in a very short period of time. What % of assets is financed through borrowed money. What % of assets in financed by the stakeholders. How well can the business make money from the funds given by the investors. How many days it takes for a customer to pay its a/r. How many times the business was able to sell and replace its inventory in a year. How much each investor earns from the net income. How well the company is doing on per share basis. Outside (cid:448)ie(cid:449) and (cid:448)alue of the (cid:271)usiness"s sto(cid:272)k. These 2 perecentages add up to 100%, because all assets are financed in either one of these ways. Lower is better, should be less than 1. 5 times usual credit period (30 days * 1. 5 = 45).
