its assets efficiently and to generate sales. These assets include fixed assets like plants and equipment as well as inventory‚ accounts receivable as well as any other current assets. The lower the total asset turnover ratio‚ the lower the businesses total sales. If there is a problem with any component of the company’s assets‚ whether inventory‚ receivables or fixed assets‚ it will be indicated in this equation. In FY 2011 Starbucks© generated a total revenue of $11‚700.4 million in sales
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.........................1 Current Ratio & Quick Ratio.......................................2 Receivable Turnover & Average Days’ Sales Uncollected.............2-3 Inventory Turnover & Average Days’ Inventory on Hand..............3 PROFITABILITY.......................................................3-7 Profit Margin.....................................................3-4 Asset Turnover....................................................4-5 Return on Assets..........................
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LIQUIDITY RATIO 1.1 Current Ratio: Provides an indication of the liquidity of the business by comparing the amount of current assets to current liabilities. A business’s current assets generally consist of cash‚ marketable securities‚ accounts receivable‚ and inventories. Current liabilities include accounts payable‚ current maturities of long-term debt‚ accrued income taxes‚ and other accrued expenses that are due within one year. In general‚ businesses prefer to have at least one dollar of current
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Lynn Christensen Student #0409328077 Financial Accounting Acct. 504 Professor Joyce Stiles Course Project - Kohl’s & JC Penney Submitted: August ‚ 2014 JC Penney’s: Since their founding by James Cash Penney in 1902‚ they have grown to be a major retailer‚ operating 1‚106 department stores in 49 states and Puerto Rico‚ as of January 29‚ 2011. J.C. Penney Corporation‚ Inc. was incorporated in Delaware in 1924 and J.C. Penney Company‚ Inc. was incorporated in Delaware in 2002‚ when the holding company
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We were able to distinguish the Service oriented companies by looking at their Inventories. Being those kinds of companies they showed zero inventories and “not applicable” (NA) inventory turnover. The first service-oriented company was E‚ the advertising agency. We were able to see that the accounts receivable and the accounts payable were almost equal. Which reflects how advertising agencies do business and what Lamar Advertising & Co (LAMR) had. Advertising agencies are usually paid for
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Financial Reporting II Review of Ratio Analysis Ratio analysis is a useful tool for analyzing financial statements. Calculating ratios will aid in understanding the company’s strategy and in understanding its strengths and weaknesses relative to other companies and over time. They can sometimes be useful in identifying earnings management and in understanding the effect of accounting choices on the firm’s reported profitability and growth. Finally‚ the ratios help in obtaining a better understanding
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finished goods 86‚400 Purchases 518‚400 Cost of goods sold 756‚000 Sales 864‚000 Receivables 172‚800 Payables 86‚400 Required: i. Calculate the length of the working capital cycle for the current year. Ram Material Inventory Turnover Period WIP Inventory Turnover Period Finished Goods Inventory Turnover Period Receivables Collection Period Payables Payment Period Inventory Turnover Period Working Capital Cycle =76.04+36.50+41
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The collection of accounts receivable seems to be slightly improving. It took the company slightly over one-half day less to collect on its accounts receivable in 2013 than in 2012. Items Bank or Book Addition or Subtraction Adjusting entry required a. Interest on cash balance Book Addition Yes b. Bank service charges Book Subtraction Yes c. Debit memos Book Subtraction Yes d. Outstanding checks Bank Subtraction No e. Credit memos Book Addition Yes f. NSF checks Book Subtraction Yes g Outstanding
Free 2007 1955
= 1.2 Activity Accounts receivable turnover is computed by AR/Total daily sales credits. The daily credit sales was not available on the income statements for Pepsi Co‚ only one line for revenue; therefore‚ we can assume that all sales are performed through credit‚ meaning no cash sales. The total Revenue for Pepsi Co is reflected below: 2008 Total Revenue 2007 Total Revenue 43252 39474 The total receivable for Pepsi Co is reflected below:
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liabilities The company have decreasing trend in current ratio in 2013 as compared to 2012 due to increase in short term liabilities. ii. Quick ratio or Acid-test ratio: The current assets used in the quick ratio are cash‚ accounts receivable‚ and notes receivable. These assets essentially are current assets less inventory. The quick ratio often is referred to as the acid test. Finally‚ the cash ratio is the most conservative liquidity ratio. It excludes all current assets except the most liquid:
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