ACC 221 1st Edition Lecture 38Outline of Last Lecture- Section 37: Red Company: Chapter 4 Chapter 4o Profitabilityo Cost of goods soldo Efficiencyo Leverage o Interest CoverageOutline of Current Lecture - Section 38: Red Company: Chapter 5 Chapter 5o Liquidity indicatorso Statement of cash flow indicatorso Equity investor indicatorsCurrent Lecture- Section 38: Red Company: Chapter 5 Chapter 5o Liquidity indicators Working capital- Current assets – current liabilities = working capital- Better if higher Current Ratio- Current assets / current liabilities- Better if higher Quick Ratio- Cash & cash equivalents + short-term investments + accounts receivable, net- Better if highero Statement of cash flows indicators Cash flow to net income ratio- Net cash provided by operating activities / net income- May be better if higher or lower Cash flow to capital expenditures ratio- Net cash provided by operating activities / net cash paid to purchase property, plant, and equipment- Better if higher Free cash flowThese 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.- Net cash provided by operating activities – net cash paid to purchase prop, plant, equip – cash dividends paid- Better if highero Equity investor indicators Earnings per share- Net income – dividends on preferred stock / average number of common shares outstanding- Better if higher Dividend payout %- Total cash dividends declared / net income- Better if higher or lower, depending Price-earnings ratio- Year-end closing market price of 1 common share / earnings per share- Better if higher or lower, depending Dividend yield %- Cash dividend per common share for the year / year-end closing market price of 1common share- Better if higher or lower,
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