FIL 240 Lecture 7Outline of Last Lecture I. Inventory Turnovera. Formula for inventory turnoverb. “Just in time” inventoryII. Asset Turnovera. Exampleb. ProblemIII. Riska. Rule #1b. Ways to measure riskc. Rule #2d. StocksOutline of Current Lecture I. Profitability Ratiosa. Gross Marginb. Operating Marginc. Net MarginII. Return on Assets (ROA)a. Equationb. DefinitionIII. Return on Equitya. EquationIV. Quick Ratioa. Equationb. DefinitionV. Current Ratioa. EquationVI. Burn Ratioa. EquationCurrent LectureRatio AnalysisI. Profitability Ratiosa. Gross Margini. Gross Income (Sales-COGS)/SalesThese 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. Having a very high gross margin could mean your revenue is too high, as in your prices are too high.b. Operating Margini. Operating Income/Salesc. Net Margini. Net Income/Salesii. Depends on the scale of operationsII. Return on Assets (ROA)a. Net Income/Total Assetsb. How much money your assets are making your shareholdersIII. Return on Equity (ROE)a. Net Income/Total Stockholders’ Equity IV. Quick Ratioa. (Current Assets – Inventories)/Current Liabilitiesb. How quickly your assets could cover your liabilitiesV. Current Ratioa. Current Assets/Current LiabilitiesVI. Burn Ratioa. Cash & Cash Equivalents/Current
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