|
Erstellt von Emma Sexton
vor mehr als ein Jahr
|
|
Frage | Antworten |
What are current assets? | Cash and other assets that will be converted to cash within 1 year |
How are current assets on the balance sheet? | In order of liquidity |
What is the most and least liquid assets? | Most liquid - cash Lease liquid - inventory |
What are current liabilities? | Obligations that should be paid within 1 year |
What are the 3 major current liability items? | 1. Accounts Payable 2. Notes Payable 3. Expenses Payable |
What is working capital? | Current assets and current liabilities |
What is net working capital? | Current assets – current liabilities |
What is net working management? | The management of how we will short-term assets and liabilities |
Working capital management is a process that involves day-to-day activities related to: | 1. Level of current assets 2. Proportion of short-term/long term debt 3. Level of investment in each current asset 4. Proportions of short-term credit |
What is the operating cycle? | The length of time it takes to: 1. purchase inventory 2. distribute / sell inventory 3. collect payment |
Formula for operating cycle | Inventory Conversion Period + Receivable Conversion Period The time it takes to produce and sell products + the time it takes to collect on receivables |
How do you calculate the inventory conversion period? | Average inventory / (COGS/365) |
How do you calculate the receivables conversion period? | Average accounts receivable / (annual credit sales / 365) |
What is the cash conversion cycle? | The number of days that pass until cash is collected from a sale. Allows us to determine how long we have till we must pay. |
What is the formula for the cash conversion cycle? | Operating cycle - payables deferral period |
What is the definition of the payables deferral period? | The time from when we receive inventory to when we have to pay for it |
How do you calculate the payable deferral period? | Average accounts payable / (COGS/365) |
What should we consider to determine our level of working capital investment? (How much short term investment should we hold onto?) | 1. Profitability 2. Risk that they might not meet obligations |
What are the three approaches to determining the level of working capital investment? | 1. Conservative approach 2. Aggressive approach 3. Moderate approach |
The conservative approach has: ______ current assets, ______ profitability ______ risk | More ; less ; less |
The aggressive approach has: ______ current assets, ______ profitability ______ risk | Less ; more ; more |
How do you measure rate of return / profitability? | EBIT / Assets |
What is the current ratio? | Current assets / current liabilities |
What does the net working capital position measure? | Risk |
Möchten Sie mit GoConqr kostenlos Ihre eigenen Karteikarten erstellen? Mehr erfahren.