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Chapter3 141015140931 Conversion Gate02 PDF
Chapter3 141015140931 Conversion Gate02 PDF
Quick Ratio =
Cash+Marketable Securities+Accounts Receivable
Current Liabilities
Analyzing Activity
• Activity Ratios measure the effectiveness of
managing accounts receivable, inventory,
accounts payable, fixed assets, and total
assets.
• There are Activity Ratios for each of these
management issues.
Average Age of Inventory
• This ratio measures the effective management of
inventory in terms of number of days inventory is
held.
Recall that EBIT stands for Earnings Before Interest and Taxes.
Fixed-Charge Coverage Ratio
• This ratio measures the ability to meet all fixed
financial payments.