SU8: Activity Measures Flashcards
Accounts Receivable Turnover
Net Credit Sales / Average AR
Days Sales Outstanding
Days in Year / AR Turnover
Inventory Turnover
Cogs / Average Inventory
Days Sales in Inventory
Days In Year / Inventory Turn
Accounts Payable Turnover
Purchases / Average Accounts Payable
Days Purchases in Accounts Payable
Days in Year / Accounts Payable Turnover
Operating Cycle
Days Sales Outstanding in Receivables + Days Sales In Inventory
Cash Cycle
Operating Cycle - Days Purchases in Accounts Payable
Working Capital Turnover
Sales / Working Capital
Fixed Assets Turnover
Net Sales / Average PPE
Total Asset Turnover Ratio
Net Sales / Average Total Assets
Usable Funds Calculation
Invoice Amount x (1 - Discount Percent)
Annualized Cost of Not Taking a Discount
[Discount / (1 - Discount Percent)] x [Days in Year / (Total Payment Period - Discount Period)]
Effective interest Rate
Net Interest Expense / Usable Funds
Effective rate on a discounted loan
Stated Rate / (1 - Stated Rate)
Discounted Loan - total amount available
Loan Amount = Usable Funds / (1 - Stated Rate)
Loan amount with compensating balance
Usable Funds / (1 - Compensating balance Percent)
Rate of Loan Amount with Compensating Balance
Stated Rate / (1 - Compensating Balance Percent)
Annualized Rate of Commercial Paper
[(Face Value - Net Proceeds) / Net Proceeds] x Number of terms per year
What is a bankers acceptance?
A source of short term financing. sort of like a very short term bond.
What is a trust receipt
an instrument issued by a borrower that proviced inventory as collateral.
chattel mortgage
a loan secured by personal property (movable property such as equipment or livestock)
floating lien
a loan secured by property, such as inventory, the composition of which may be constantly changing
lease
a long-term, contractual agreement in which the owner of property (the lessor) allows another party (the lessee) the right to use the property for a stated period in exchange for a stated payment
after-tax outflows
After-tax outflows consider the effect of interest expense and depreciation expense on cash outflows. These expenses create tax-shield benefits that offset lease, or loan, payments (i.e., cash outflows) in an amount equal to the firm’s tax rate multiplied by the expense
net advantage to leasing
difference between the present value of the lease financing option and the present value of the debt financing option, or present value of the cost of owning
Convertible Securities
debt or preferred stock securities that contain a provision allowing the holder to convert the securities into some specified number of common shares after a specified time has elapsed. The conversion feature is an enticement to potential investors that allows the corporation to raise capital at a cost lower than a straight new common equity issue
Stock Purchase Warrants
a call option on the corporation’s common stock. After a specified time has elapsed, the holder of the warrant can exchange the warrant plus a specified amount of cash for some number of shares of common stock
A high sales to working capital ratio could indicate
that a firm is undercapitalized
Effective rate of a discounted loan with a compensating balance
Stated Rate / (1 - Stated Rate - Compensating Balance %)
Letter of credit
an engagement by a financial institution to pay drafts or other demands for payment for its customer
