FIL 240 Lecture 8 Outline of Last 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 Outline of Current 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 Current Lecture Volatility Risk I Inventory Turnover a Sales Inventory 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 b Just in time inventory can be a problem when you run out and don t have enough to get you through the day Asset Turnover a US refinery industry hadn t been updated or new ones built since the 1970s so the value of the refineries was very low and the sales were high This caused the old refineries to get worked until they caused an explosion b A high asset turnover can be a warning towards future breakdown Risk a High risk expected possible high return b Ways to measure risk i Standard deviation ii Coefficient of variation CV iii Interest rates iv Beta c When you are protected from risk you re more likely to take higher risks d Stocks i The more diverse your stock portfolio the less risk ii Market related risk the bottom line amount of risk always included when buying stock iii Mutual Funds spending less money to have a diverse portfolio along with many others pooling money no fees but limited trading ability iv Diversifiable risk nonsystematic risk risk you don t have to take and are not rewarded by it v ETF exchange traded fund stocks that invest in all the Standard Poor s 500 companies
View Full Document
Unlocking...