Exam (elaborations)
Peregrine -Foundations of Business Finance and Verified Answers
- Course
- Institution
Peregrine -Foundations of Business Finance and Verified Answers
[Show more]
Content preview
Peregrine -Foundations of Business Finance and VerifiedAnswers
occur when depreciation and other noncash charges during the period are greater than the
net loss. The
statement of cash flows treats net income (or net losses) and depreciation and other noncash
charges as
separate entries.
A decrease in an asset (such as inventory) is an __________ of cash because cash that has
been tied up
in the asset is released and can be used for some other purpose, such as repaying a loan. -
✔✔inflow
An increase in inventory (or any other asset) is an __________ of cash because additional
inventory ties
up more of the firm's cash. - ✔✔outflow
Logic suggests that if net income is a cash __________, then a net loss (negative net profit
after taxes) is
a cash __________. - ✔✔inflow, outflow
The __________ __________, one of the most commonly cited financial ratios, measures the
firm's
,ability to meet its short-term obligations. It is defined as current assets divided by current
liabilities. -
✔✔current ratio
__________ __________ provides a measure of how quickly a firm sells its goods. -
✔✔Inventory
turnover
Inventory turnover can easily be converted into a(n) __________ __________ __________
__________
by dividing the turnover figure into 365 (the number of days in a year). - ✔✔average age of
inventory
Firms use the __________ __________ __________ or __________ __________ __________
__________ __________ in evaluating credit and collection policies. - ✔✔average collection
period,
average age of accounts receivable
Firms use the __________ __________ __________ to evaluate their payment performance.
This metric
measures the average length of time it takes a firm to pay its suppliers. - ✔✔average payment
period
, The __________ __________ __________ __________ measures the efficiency with which a
firm uses
its fixed assets. The ratio tells analysts how many dollars of sales a firm generates per dollar of
investment in fixed assets. - ✔✔fixed asset turnover ratio
The __________ __________ __________ __________ indicates the efficiency with which a
firm uses all
its assets to generate sales. - ✔✔total asset turnover ratio
__________ __________ focus on income statement measures of a firm's ability to generate
sufficient
cash flow to make scheduled interest and principal payments. - ✔✔Coverage ratios
__________ __________ measure the proportion of total assets financed by a firm's creditors.
The
higher this ratio, the greater is the firm's reliance on borrowed money to finance its activities.
- ✔✔Debt
ratios
A close cousin of the debt ratio is the __________-__________-__________ __________,
sometimes
called the __________ __________. This ratio is calculated as total assets divided by common
stock
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller TheeGrades. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75323 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now