MGMT 3320 Chapter Notes - Chapter 3: Asset Turnover, Root Mean Square, Accounts Payable

• School: University of Guelph
• Department: Management
• Course: MGMT 3320
• Professor: Elliot Currie

Document Summary

Liquidity ratios: current ratio = current assets current liabilities, quick ratio = (current - inventory) current liabilities. Debt utilization ratios: debt to total assets = total debt total assets, times interest earned = ebiat interest, xed charged coverage = earning before xed chargers and taxes xed charges. Dupont analysis: examine the source of company"s pro tability, looks at return on equity as a portion of return on assets and equity multiplier. Roe = roa x equity multipler equity multiplier = total assets equity. Asset utilization ratios: explain why one rm can turn over its assets more rapidly than another, relate to balance sheet and income statement, desire higher turnover ratios, indicating that the assets are being used ef ciently to generate sales. Liquidity ratios: examine current assets and liabilities of the rm focusing on the need to meet cash requirement quickly, ratios should be low.