Ratio Analysis and Operating Efficiency

Why ratios

Receivables turnover and days sales outstanding

Inventory turnover and the operating cycle

The cash conversion cycle

What is the fundamental contribution of ratio analysis beyond reading raw financial statements?

A firm has credit sales of 4,380,000 dollars and average accounts receivable of 600,000 dollars. What are receivables turnover and days sales outstanding?

A firm's days sales outstanding has drifted from 35 to 52 days over three years. What is the most likely reading?

In working capital analysis, what exactly does the operating cycle measure for a firm?

A retailer collects from customers at the till but pays suppliers 45 days later, with minimal inventory days. What does its cash conversion cycle look like?

Why does shortening the cash conversion cycle create value even when sales and profit are unchanged?

In the accounts receivable turnover ratio, credit sales are divided by which balance sheet item? Answer with two words.

What number of days in a year is divided by a turnover ratio to express it as days outstanding? Write the number.

What three-word term names the net days a dollar spends tied up in working capital, inventory days plus receivable days minus payable days? Answer in lowercase.

What three-word term names 365 divided by inventory turnover, the average days stock is held? Answer in lowercase.