FIL 240 Lecture 7 Outline of Last Lecture I Inventory Turnover a Formula for inventory turnover b Just in time inventory II Asset Turnover a Example b Problem III Risk a Rule 1 b Ways to measure risk c Rule 2 d Stocks Outline of Current Lecture I Profitability Ratios a Gross Margin b Operating Margin c Net Margin II Return on Assets ROA a Equation b Definition III Return on Equity a Equation IV Quick Ratio a Equation b Definition V Current Ratio a Equation VI Burn Ratio a Equation Current Lecture Ratio Analysis I Profitability Ratios a Gross Margin i Gross Income Sales COGS Sales These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute II III IV V VI ii Having a very high gross margin could mean your revenue is too high as in your prices are too high b Operating Margin i Operating Income Sales c Net Margin i Net Income Sales ii Depends on the scale of operations Return on Assets ROA a Net Income Total Assets b How much money your assets are making your shareholders Return on Equity ROE a Net Income Total Stockholders Equity Quick Ratio a Current Assets Inventories Current Liabilities b How quickly your assets could cover your liabilities Current Ratio a Current Assets Current Liabilities Burn Ratio a Cash Cash Equivalents Current Liabilities
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