Current Ratio = Current Assets/Current Liabilities 

Ex.  $708/$540 = 1.31 Times 

Current Ratio is a measure of short-term liquidity. 

The value that results of 1.31 means , the company has current liabilities covered 1.31 times over. 

To a short term creditor or supplier, higher current ratio that better. High ratio indicates liquidty 

What is equation for Quick Ratio ? 

What does it tell us ? 

Quick Ratio=  Current Assets- Inventory / Current Liabilities 

Ex. Quick Ratio =- $708 - 422 / $540 = .53 times

Quick Ratio is the measure of a companies short term liquduity. Its the companies ability to meet its short-term obligations with its liquid assets.

What is cash ratio? 

What does it tell us ? 

Cash Ratio = Cash / Current Liabilities 

Short Term Debt always changing . 

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Times Interest Earned Equation?

Meaning? 

TIE Ratio Equation- EBIT/Interest

Ex. $691/$141 = 4.9 times 

Measure of long term solvency

Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth.

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What is Cash Coverage Ratio? 

What does it mean ?

Cash Coverage Ration= 

EBIT + Depreciation/ Interest 

Ex. $691 + 276 / $141 = $967/$141 = 6.9 times. 

Inventory Turnover = COGS/ Inventory 

Ex. 

$1,344 / $422 = 3.2 Times 

Recievables Turnover equation? 

What is it ?

Recievables Turnover = Sales/ Accounts Recievable

Ex.$2,311 / $188 = 12.3 Times 

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Business's dont recieve the cash until they COLLECT the money

Total Asset Turnover = Sales/Total Assets 

The ratio of the value of a company’s sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue

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Controller: 

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Capital Structure: Capital Hill Debt Equity

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• Part of working capital
• current asset

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• Each owner has unlimited liability for all firm debts 
• It is difficult to transfer ownership 

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Limited to however much ea. partner invested 

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• Personal liability 
• Taxation of personal income 
• fund raising limitations 

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• Corporation is a seperate legal entity with the ability to acquire and exchange property 
• Corporations can enter contracts 

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Balance Sheet 

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Net Income - Dividends= Retained Earnings

The value of the asset you own after expenses, and interest have been subtracted.

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• Sales - COGS = Gross Profit - General & Adm Expenses .

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Beg Balance Sheet & Ending Balance Sheet 

method for creating a statement of cash flows a company may use during any given reporting period. Theindirect method uses accrual accounting information to present the cash flows from the operations section of the cash flow statement

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