FINMAN_FS ANALYSIS

• What does the Inventory Turnover ratio measure?

  How quickly a company sells its inventory
• What does Accounts Receivable Days measure?

  How long it takes friends to pay you
• What does operational efficiency measure?

  How well a company generates revenue
• What does the Accounts Payable Days ratio show?

  How long it takes to pay suppliers
• How are net assets calculated?

  Total assets minus total liabilities
• What does the Accounts Receivable Days ratio indicate?

  How long it takes to collect payments from customers
• What does Accounts Payable Days measure?

  How long it takes to pay for lemons
• What does Inventory Turnover measure?

  How fast you sell lemonade before it spoils
• How does net asset turnover differ from total asset turnover?

  Net asset turnover excludes liabilities
• What is the focus of operational efficiency?

  The relationship between inputs and outputs
• What does Net Asset Turnover measure?

  Sales after subtracting what you owe
• If a company has COGS of $100,000 and average inventory of $25,000, what is the inventory turnover?

  4 times per year
• What does high operational efficiency indicate?

  Effective use of resources to generate income
• What does Total Asset Turnover measure?

  Sales made with all your resources
• What does the net asset turnover ratio measure?

  Efficiency of net assets in generating sales
• How does inventory turnover ratio indicate company performance?

  A higher ratio means faster inventory sales
• If a company has an inventory turnover ratio of 6, what does it indicate compared to an industry average of 5?

  It is selling inventory faster than average
• What do industry averages help to assess?

  Company performance against its peers
• How do operational efficiency ratios help a lemonade stand owner?

  • Assess resource usage
  • Identify areas for improvement
  • Maximize profit potential
• What does the Total Asset Turnover ratio measure?

  How well a company generates revenue from all assets
• What does calculating inventory turnover help you understand?

  How fast a company sells its inventory
• What are operational efficiency ratios used for?

  Making informed business decisions
• What does a higher inventory turnover number indicate?

  More efficient inventory management
• If a company has average accounts receivable of $50,000 and credit sales of $300,000, what are the accounts receivable days?

  60.8 days
• What does an accounts receivable days value of 61 days indicate about a company's cash flow?

  It suggests a healthy cash flow
• What is the formula for calculating Accounts Payable Days?

  (Accounts Payable / Cost of Goods Sold) * Days
• What does accounts payable days measure?

  Time taken to pay suppliers
• What are the key operational efficiency ratios?

  • Inventory Turnover
  • Accounts Receivable Days
  • Accounts Payable Days
  • Total Asset Turnover
  • Net Asset Turnover
• Why are these operational efficiency ratios important for a lemonade stand owner?

  They help assess resource usage for profit
• What does lower operational efficiency suggest?

  Need to improve resource management
• What is the formula for inventory turnover?

  Inventory Turnover = COGS / Average Inventory
• What is the formula for calculating accounts receivable days?

  • Accounts Receivable Days = Average Accounts Receivable / Credit Sales x 365
• Why is a lower accounts receivable days number better?

  It indicates quicker payment collection
• How is Total Asset Turnover similar to a lemonade stand's sales?

  It checks sales relative to owned assets
• What does an inventory turnover of 4 times per year indicate?

  The company sells and replaces inventory 4 times
• If Net Sales are $200,000 and Average Net Assets are $100,000, what is the net asset turnover?

  2
• How can a business improve cash flow if it has high Accounts Payable Days?

  Ensure it doesn't strain supplier relations
• If a company has average accounts payable of $40,000 and credit purchases of $200,000, what are the accounts payable days?

  73 days
• If a lemonade stand has Net Sales of $10,000 and Average Total Assets of $5,000, what is the Total Asset Turnover?

  2
• How can high Accounts Payable Days affect cash flow?

  It can improve cash flow but strain supplier relations