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Type of Securities Investment Strategies Fundamental Analysis Technical Analysis
Understanding Financial Statements Income Statement Analysis Balance Sheet Analysis Cash Flow Analysis Shareholders' Equity Analysis Ratios and Definitions


Ratios and Definitions

 - Market Price Analysis

 - Profitability Analysis

 - Liquidity Analysis

 - Cash Flow Analysis

 - Capital – Leverage Analysis

 - Activity Analysis


 

 

 


Activity Analysis
Measures management’s efficiency

 

·        Accounts Receivable Turnover Ratio – Credit sales divided by average accounts receivable.

·        Accounts Receivable Collection Period (Days Sales Outstanding Ratio) – Number of days in the year divided by the accounts receivable turnover ratio.

·        Inventory Turnover Ratio – Cost of goods sold divided by average inventories.

·        Days Sales in Inventory Ratio – Number of days in the year divided by the inventory turnover ratio.

·        Operating Cycle in Days – Accounts receivable collection period (days sales outstanding ratio) plus days sales in inventory ratio.

·        Accounts Payable Turnover Ratio – Cost of goods sold divided by average accounts payable.

·        Accounts Payable Days Outstanding Ratio – Number of days in the year divided by accounts payable turnover ratio.

·        Cash Conversion Cycle in Days – Days sales outstanding, plus days sales in inventory, minus accounts payable days outstanding.

 

 

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