Enabling competencies

Question 1

Types of analysis tools

Answer 1

o	Issue: Capital Budgeting (purchasing, expanding)
	Discounted cash flow (NPV)
	Internal rate of return (IRR)
	Payback period
o	Issue: Financing Analysis (Enough cash to purchase or expand?)
	Undiscounted cash flow
o	Issue: Product Analysis
	CM analysis
	Constrained Resource Analysis

Question 2

Ratio's
Quick Ratio
Receivables turnover
Average collection period
Inventory turnover
Inventory period
Return on assets
Return on equity
Debt ratio
Debt-to-equity
Debt service coverage
Times-interest-earned ratio
Asset turnover
Dividend payout

Answer 2

Quick ratio: (Current assets – prepaid expenses – inventory) / current liabilities
Receivables turnover: Credit sales / average accounts receivable
Average collection period: Average accounts receivable / (credit sales / 365)
Inventory turnover: Cost of goods sold / average inventory
Inventory period: Average inventory / (cost of goods sold / 365)
Return on assets: Net income / average total assets
Return on equity: Net income / average equity
Debt ratio: Total liabilities / total assets
Debt-to-equity: Total liabilities / equity
Debt service coverage: Net operating income / (principal + interest payments)
Times-interest-earned ratio: EBIT / interest expense
Asset turnover: Sales / average total assets
Dividend payout: Yearly dividend per share / earnings per share OR dividends / net income