[Title-Bar: WHAT ARE FINANCIAL RATIOS?|] [Video editor notes: show a college girl in class listening to a lecture|] [Video editor notes: show a teacher asking a question|] Monique is a freshman at Financial State University. She's excited to take a financial analysis course because she has a job offer to be an intern at Money Corporation. This is Monique's first day in class and her professor, Ms. Collins starts the lecture by asking, 'What is a financial ratio?' [Video editor notes: teacher should look around the room waiting for students to answer the question|] [Video editor notes: define a financial ratio as noted below|] As she look around the class, no one raises their hand. Ms. Collins says, 'A financial ratio is calculated …show more content…
The formula is current assets divided by current liabilities. These line items can be found on the balance sheet. The higher the ratio, the better the company's ability to pay their current liabilities with their current assets. If the ratio is low, a company may have trouble paying their obligations. ~'Now let's look at a debt ratio~', says Ms. Collins. [Title-Bar: DEBT RATIO|] [Video editor notes: explain debt ratio and show the formula|] Next Ms. Collins explains debt ratio. She said the debt ratio shows what % of assets are financed with liabilities. Remember, liabilities are obligations a company owes, like a loan and assets are items we own, such as a truck. For example, what percentage of the company truck did we finance with a loan? The debt ratio gives us this answer by taking total assets divided by total liabilities. Ms. Collins goes on to say, the lower the ratio, the less % of assets are financed with liabilities. Meaning you own more of the assets than you owe. Any questions, so far we've talked about being able to pay what we owe, what about profitability?~' ~'What ratio shows profitability?~' [Title-Bar: GROSS
Debt - Equity ratio was included to show that both companies are financed with a large portion of debt, yet remain
In this case, we can say that Amazon performance is a lot better than CanGo. A high Debt to Equity Ratio generally means that a company has been aggressive in financing its growth with debt. Debt can come in the form of stocks, bonds, and loans that the company borrowed against. Amazon current ratio is 1.31, but CanGo current ratio is 5.33. In general we can see that CanGo is performing better in this area compared with their main competitor Amazon, because this ratio shows that CanGo is capable of repaying its debts and liabilities than
Basically, debt can be regarded as an amount of money ‘borrowed’ by one party to another. Debts that will be paid by customers is good debts. This means the money, which has already been converted into products and services can be paid successfully by customers in a certain time period. Good debt can help companies generate income and fund their normal operations. If the accountant can be reasonably sure that the total shown in the statement of financial position represents good debts, the liquidity of capital and cash are guaranteed and facilitated.
The debt to ratio is a ratio that compares a firms total liabilities and shareholders’ equity. It shows the proportion of the amount of money invested by the business owners as well as external entities. Debt to Equity Ratio = Total Liabilities/Shareholders’ Equity = $80,994/$931,490
This ratio is exactly the equal to the similar industry average which shows that the company is doing not so bad. Furthermore, this shows that the company is able to pay off their short term liabilities simply with their current assets. This also means that the business is easy to pay off their short term liabilities in the forthcoming period of time. The ‘debtor’s payment period’ for Kai Enterprise is 34 days.
Managerial Finance Managerial finance is important in our personal life as well as in a business realm. Every day personal decisions are made as to how much should be spent on bills, savings, spending and investing. “In a business context, finance involves the same types of decisions: how firms raise money from investors, how firms invest money in an attempt to earn a profit, and how they decide whether to reinvest profits in the business or distribute them back to investors” (Gitman, 2015, pg. 4). Finance managers use financial techniques to make changes that need to be made to prevent a loss to the company. Cash flow, balances, accounting information and other financial figures are all used for the organization and dispersement of the companies
Firms with excessive liabilities may run into severe trouble, even if they are otherwise successful entities. In finance, the term leverage refers to the ration between the firm 's liabilities and equity and is calculated by dividing total liability by shareholder equity. Note that some analysts prefer to use only long-term liabilities, which are payment obligations coming due in one year or more, when calculating leverage. The more common leverage formula, however, incorporates all liabilities. If stockholder equity is less than total liability, the firm 's leverage ratio will be greater than 1.
This individual wasn’t able to describe what a fraction represents or find an equivalent fraction. Student B was able to partially answer the question that asked them to label the fractions, but couldn’t remember one of the terms. Furthermore, Student B was able to partially simplify the problem, but wasn’t able to find the final solution. Similar to Student A, Student B had difficulty finding common denominators and finding the solutions to the division problems.
The rest of the classmates were really close to equaling the same numbers it ranges from 2.20 being the farthest away to .5 being the closest Figure 1.6. This last set of measurements shows that the classmates are very equal in thinking that they are not proportionate but are different in all different ways and can be more proportionate than the
Upon looking at the 2012 financial ratios for IBM, one generally gets the impression that the company is in good financial standings, but how does 2012 compare with 2011 and the last few previous fiscal years? In 2011, IBM brought in 107 billion dollars in revenue, compared to the 104.5 billion dollars in revenue in 2012. Although at face value it appears that IBM did worse in 2012, having a 2.3 percent reduction in revenue, upon closer look, IBM was more profitable in 2012 (Interational Business Machines Corporation, 2013). In 2012, IBM made 16.6 billion dollars in net income, compared to the 15.9 in 2011, a 4.22 percent increase. Many other ratios, including operations income, stock value increased from 2012 to 2011.
The understanding of the construction of the capital structure before Barton & Gordon (1988), is represented in figure 2. The equity/debt ratio was thought to be influenced only by the contextual financial paradigm and firm specific variables. Figure 2: Understanding of factors that influence equity/debt ratio before Barton & Gordon (1988) The contribution of Barton & Gordon (1988) rests in suggesting variables and interaction based on a corporate strategy framework that appears to hold promise in pursuing a behaviorally based theoretical explanation of capital structure decisions. Using the
The third main idea is mixed numbers and adding and subtracting like and unlike denominators. When adding mixed numbered fractions with the same denominator you add the whole numbers like normal and add the fractions like normal remembering to keep the denominator. For example, 2 ⅔ + 1 ⅓ = 2 + 1 = 3 and then 2 +1 for the numerators keeping the denominator a 3 gives you 3 3/3 or 4. In the denominators are not the same you leave the whole number alone and adjust the fractions like you did before. For example, 3 ½ + 5 ⅔ = the LCD is 6 so for ½ 3 /6 2 x 3 =6 and 3 x 1 = 3 keep the new denominator 3/6.
This ratio will help the company create the level of stock price regarding its sales and revenues and in considering expenses and liabilities. Since Walmart is on
In order to allow a stable expansion of the economy, the Fed primarily manages the growth of bank reserves and money supply through three main tools. To implement the task of controlling the money supply, the Fed may implement a change in reserve requirements, a change in discount rate or make open-market operations.(Cloutier, n.d.) The cash reserve ratio is the percentage of reserves a commercial bank is required to hold against deposits. If regulators decide to lower the cash reserve ratio, the commercial banks will be able to lend more thus increasing the supply of money or the amount of money in the economy.
Fractions are often seen by teachers as difficult to teach in the classroom and in turn difficult for children to understand how and why we use them. Although this is the case, it should be noted that fractions underpin a child’s ability to develop proportional reasoning and helps promote further progress in future mathematical studies (Clarke, Roche & Mitchell, 2008). This highlights the need for a child to be proficient in fractions and for their teacher to also be able to progress a child’s learning with engaging and appropriate activities. Several key ideas and strategies underpin the development of a child’s learning of fractions.