A company's ability to collect its accounts receivable.
Accounts receivable turnover- relationship between sales and accounts receivable. Number of days' sales receivables (multiply by 365) the bigger the number the worse!
A financial statement in which all items are expressed only in relative terms.
Base everything off of sales or total assets. Percentage instead of dollar value
Take out the amounts from the vertical analysis and leave the percentages
= Current Assets/Current Liabilities
Current Liabilities= Accounts payable
(Net income - Preferred Stock Dividends) / Average Shares of common stock outstanding
Financial analysis that compares an item in a current statement with the same item in prior statements.
A company's ability to manage its inventory effectively
Inventory turnover- relationship between the volume of goods (merchandise) sold and inventory
Cost of Goods sold/average inventory
Total Liabilities/Total Stockholders' Equity
The higher this, the more risky the company
Focus on columns; shows each asset as percentage; An analysis that compares each item in a current statement with a total amount within in the same statement.
The cost that is reported as an expense when merchandise is sold
Beginning of Year Inventory + Net Purchases - End of Year Inventory
The inventory system in which the inventory records do not show the amount available for sale or sold during the period.
When you buy something purchases goes up
The inventory system in which each purchase and sale of merchandise is recorded in an inventory account.
Dual transaction; always called inventory when being recorded
When you buy something inventory goes up
Revenues less operating expenses and service department charges for a profit or an investment center.
Selling expenses- Expenses that are incurred directly in the selling of merchandise.
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