Ratio analysis Required Match each of the following ratios with the formula used to computeit. 1. Working
Question:
Required
Match each of the following ratios with the formula used to computeit.
1. Working capital 2. Current ratio a. Net income Average total stockholders' equity b. Cost of goods soldAverage inventory c. Current assets Current liabilities d. 365 Inventory turnover e. Net income Average total assets 3. Quick ratio 4. Accounts receivable turnover 5. Average number of days to collect receivables f. (Net income Preferred dividends) Average 6. Inventory turnover 7. Average number of days to g.(Current assets Inventory Prepaid items) outstanding common shares sell inventory 8. Debt to assets ratio 9. Debt to equity ratio 10. Return on investment 11. Return on equity 12. Earnings per share Current liabilities h. Total liabilitiesTotal assets i. 365 days Accounts receivable turnover j. Total liabilitiesTotal stockholders' equity k. Net credit sales Average accounts receivables l. Current assetsCurrent liabilities
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Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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