Professional Documents
Culture Documents
Credit Analysis
10
CHAPTER
10-2
10-3
10-4
Denominator Considerations
Payables vary with sales.
Current liabilities do not include prospective cash outlays.
10-5
10-6
Note of caution
Quality of current assets and the composition of current liabilities are
more important in evaluating the current ratio.
Working capital requirements vary with industry conditions and the
length of a companys net trade cycle.
10-7
10-8
10-9
10-10
10-11
10-12
Inventory management
Effective inventory management increases inventory
turnover.
10-13
10-14
10-15
10-16
10-17
10-18
10-19
10-20
$ 70,000
150,000
65,000
130,000
35,000
18,000
200,000
43,000
200,000
$750,000
520,000
350,000
25,000
20,000
10-21
$ 70,000
$ 150,000
825,000
$ 975,000
( 206,250)(a)
768,750
$ 838,750
$ 543,000
(15,000)
18,000
203,500
749,500
$ 89,250
50,000
$ 39,250
(continued)
10-22
572,000
150,000
722,000
(65,000)
657,000