You are the lending officer in a bank and a new customer has approached you for a

Question:

You are the lending officer in a bank and a new customer has approached you for a working capital loan. A working capital loan is intended to help a business finance the fluctuations in daily cash flows that arise from the lead-lag relationships of operating a business. Explain how you would use the turnover ratio, , and turnover ratio to assist you in your analysis.
Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...