Term
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Definition
Current Assets - Current Liabilties
Accounting Definition - company's abilties to meet its short term obligations and fund growth |
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Term
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Definition
| Non-Cash Current Assets - Non-Debt Current Liabilities ("banking interpretation" - adjusted for financing (cash and debt)) |
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Term
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Definition
| Current Assets / Current Liabilties (usually, ration of less than 1 means the company lacks liquidity because the current assets cannot be converted in enough cash to meet its obligations due w/in 1 year) |
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Term
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Definition
Quick Assets / Current Liabilities
- more conservative measure that only includes the most liquid assets: cash, marketable securities, short-term investments and trade account receivables
- excluded are inventories, prepaids, other current assets and other receivables |
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Term
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Definition
Current Liabilities - Quick Assets / Inventory
-Measures the % of inventories (at book value) which must be liquidated to meet current liabilties after exhausting quick assets; often calculated if Quick Ratio is under 1.0x |
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Term
| Accounts Receivable Turnover |
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Definition
Sales / Accounts Receivable
- Number of times accounts receivable turn per period |
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Term
| Accounts Receivable Days (Collection Period) |
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Definition
(Accounts Receivable / Sales) x Days or
Days / (Sales / Accounts Receivable)
- Indicates the average number of days between sales of an item and the receipt of cash. Measures how well a company is managing its A/R |
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Term
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Definition
COGS / Inventory
Number of times invetory is sold per period |
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Term
| Inventory Days (Holding Period) |
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Definition
(Inventory / COGS) x Days
Days / (COGS / Inventory)
Indicates how long a company holds inventory. Measures inventory efficiency. |
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Term
| Accounts Payable Turnover |
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Definition
COGS / A/P
Number of times accounts payable turn per period |
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Term
| Accounts Payable Days (Average Settlement Period) |
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Definition
(Accounts Payable / COGS) x Days
Days / (COGS / Accounts Payable)
Indicates the average number of days payables are outstanding |
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Term
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Definition
Sales / Net Fixed Assets
Net PPE (net of depreciation)
-Measures productivity of the fixed assets, calculating how much sales is generated from the investment in fixed assets |
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Term
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Definition
Sales / Total Assets
- Measures the productivity of all the assets (how efficient management is in utilizing assets) |
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Term
| Working investment as % of Sales |
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Definition
Working Investment / Sales
- Measures the dollar amount of financing needed for each dollar in sales. Also viewed as financing required to complete the cash conversion cycle
Working investment = non-cash current assets less non-debt current liabilities |
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Term
| Cash Conversion Cycle Days |
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Definition
| Accounts Receivable Days + Inventory Days - Accounts Payable Days |
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Term
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Definition
Total Debt / Total Capitalization
Total Capitalization = Debt + Equity + Min. Interest + Preferred Stock
Measures the percentage of capital attributable to debt |
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Term
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Definition
Net Debt / Net Capitalization
Net Debt = Total Debt - Cash
Net Capitlization = Debt + Equity + Min Interest + Preferred Stock - Cash
Net debt assumpts that cash can be used to pay down debt |
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Term
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Definition
| Total Debt / EBIT - how many years of the current level of operating income is required to pay off the entire debt balance. The higher the number, the riskier the credit of the company |
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Term
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Definition
Total Debt / EBITDA
How many years of the current level of operating cash flow is required to pay off the entire debt balance. THe higher the number, the riskier the credit of the company |
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Term
| Debt to EBITDA less CAPEX |
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Definition
Total Debt / (EBITDA - CAPEX)
More conservative measure after capital expenditures is deducted from EBITDA |
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Term
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Definition
| EBITDA / Interest Expense |
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