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Operating Capacity Ratio Analysis Author: Frank J. Fabozzi .Pamela P. Peterson Material Source:《Financial Management and Analysis

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1.财务比率分析

2.经营比率

3.存货的管理

4.应收账款的管理

5.全部资产的管理

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6.应收账款的管理

7.存货的管理

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Using financial ratio analysis Financial analysis provides information concerning a firm’s operating performance and financial condition. This information is useful to analysis in evaluating a firm’s operation and to an investor in evaluating the risk and potential returns to investing in a firm’s securities. Activity ratios Activity ratios—for the most part, turnover ratios—can be used to evaluate the benefits produced by specific assets, such as inventory or accounts receivable or to evaluate the benefits produced by the totality of the firm’s assets. Inventory management . The inventory turnover ratio indicates how quickly a firm has used inventory to generate the goods and services that are sold. The inventory turnover is the ratio of the cost of goods sold to inventory: Inventory turnover ratio=Cost of goods sold/Inventory Accounts receivable management In much the same way we evaluated inventory turnover, we can evaluate a firm’s management of its accounts receivable and its credit policy. The accounts receivable turnover ratio is a measure of how effectively a firm is using credit extended to customers. The reason for extending credit is to increase sales. The downside to extending credit is the possibility of default—customers not paying when promised. The benefit obtained from extending credit is referred to as net credit sales—sales on credit less returns and refunds. Accounts receivable turnover=Net credit sales/Accounts receivable Overall asset management The inventory and accounts receivable turnover ratios reflect the benefits obtained from the use of specific assets (inventory and accounts receivable.)For a more general picture of the productivity of the firm, we can compare the sales during a period with the total assets that generated these sales. One way is with the total asset turnover ratio which tells us how many times during the year the value of a firm’s total assets is generated in sales: Total assets turnover=Sales/Total assets An alternative is to focus only on fixed assets, the long-term, tangible assets of the firm. The fixed asset turnover is the ratio of sales to fixed assets: Fixed asset turnover ratio=Sales/Fixed assets Receivables Management When a firm allows customers to pay for goods and services
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at a later date, it creates accounts receivable. By allowing customers to pay some time after they receive the goods or services, you are granting credit, which we refer to as trade credit. Trade credit, also referred to as merchandise credit or dealer credit, is an informal credit arrangement. Unlike other forms of credit, trade credit is not usually evidenced by notes, but rather is generated spontaneously: Trade credit is granted when a customer buys goods or services. Monitoring Accounts Receivable: You can monitor how well accounts receivable are managed using financial ratios and aging schedules. Financial ratios can be used to get an overall picture of how fast we collect on accounts receivable. Aging schedules, which are breakdowns of the accounts receivable by how long they have been around, help you get a more detailed picture of your collection efforts. You can get an idea of how quickly we collect our accounts receivable by calculating the Number of Days of Credit ,which is the ratio of the balance in accounts receivable at a point in time (say, at the end of a year) to the credit sales per day (on average, the dollar amount of credit sales during a day): Number of days of credit = Accounts receivable/Credit sales per day The number of days credit ratio, also referred to as the average collection period and days sales outstanding (DSO), measures how long , on average, it takes us to collect on our accounts receivable. Inventory Management Inventory is the stock of physical goods for eventual sale. Inventory consists of raw material, work-in-process, and finished goods available for sale. There are many factors in a decision of how much inventory to have on hand. As with accounts receivable, there is a tradeoff between the costs of investing in inventory and the costs of insufficient inventory. There’s a cost to too much inventory and there’s a cost of too little inventory. Reasons for Holding Inventory: There are several reasons to hold inventory. The most obvious is that if you sell a product, you can’t transact business without inventory. Another obvious reason is that goods cannot be manufactured instantaneously. If you manufacture goods, you will likely have some inventory in various stages of production. This is referred to as work-in-process. You also may want to have some inventory of finished goods in case sales are greater than expected. Or you may want to hold some speculative inventory for dealing with events such as a change in the product or a change in the cost of the raw materials. Further, some firms hold inventory to satisfy contractual agreements. For example, a
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retail outlet that is the sole distributor or representative of a product in a region, may be required to carry a specified inventory of goods for sale. The decision to invest in inventory involves, ultimately, determining the level of inventory such that the marginal benefit (such as providing for transactions and precautionary needs) equal the marginal cost (such as carrying costs). The level of inventory at which the marginal benefits equal the marginal cost is the owners’ wealth maximizing level. Models of Inventory Management: There are alternative models for inventory management, but the basic idea for all of them is the same: Minimize inventory costs. The Economic Order Quantity Model: The Economic Order Quantity (EOQ) model helps us determine what quantity of inventory to order each time we order so that total inventory costs throughout the period are minimized. The economic order quantity model assumes that: 1. Inventory is received instantaneously. 2. Inventory is used uniformly over the period. 3. Inventory shortages are not desirable. With these assumptions, firms can minimize the cost of inventory—the sum of the carrying costs and the ordering costs—by ordering a specific amount of inventory, referred to as the economic order quantity, each time they run out of inventory. Monitoring Inventory Management: We can monitor inventory by looking at financial ratios in much the same way we can monitor receivables. The number of days of inventory is the ratio of the dollar value of inventory at a point in time to the cost of goods sold per day: Number of days of inventory = Inventory/Average day’s cost of goods sold, This ratio is an estimate of the number of days’ worth of sales you have on hand. Combined with an estimate of the demand for your goods, this ratio helps you in planning your production and purchasing of goods. Another way to monitor inventory is the inventory turnover ratio—the ratio of what you sell over a period (the cost of goods sold) to what you have on hand at the end of that period (inventory): Inventory turnover =Cost of goods sold/Inventory, The inventory turnover ratio tells you, on average, how many times inventory flows through the firm—from raw materials to goods sold—during the period. If the typical inventory turnover for a firm is, say, five times, that means that the firm completes the cycles of investing in inventory and selling in five times in the year. If the turnover is less
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than usual, this may suggest either production is slower (resulting in relatively more work-in-process) or that sales are sluggish and perhaps need a boost from providing sales incentives or discounting prices. Also, interpretation of an inventory turnover ratio is not straightforward. Is a higher turnover good or bad? It could be either. A high turnover may mean that the firm is using its investment in inventory efficiently. But it might mean that the firm is risking a shortage of inventory. Not keeping enough on hand (relative to what is sold)incurs a chance of lost sales and customer goodwill. Using inventory turnover ratios along with measures of profitability can give you a better idea of whether you are getting an adequate return on your investment in inventory. The management of current assets requires balancing the cost of having too much tied up in the asset against the benefits of having a sufficient amount of the assets on hand. Though business practices and customs differ among industries, the general idea in the management of receivables is to grant credit to encourage sales and stay competitive, while considering the cost of tying up funds and of possible incurring bad debts. In the management of inventory, the investment in inventory differs among industries since the nature of the goods for sales dictates in large part the type of inventory required. The economic order quantity model and the just-in-time management technique can aid the financial manager in managing the investment in inventory. The common purpose of decisions related to accounts receivable and inventory is to minimize investment in short-term assets. But in all cases, you must have some investment in the asset because you will incur costs if you do not have enough of the asset. If you lack sufficient inventory or you fail to offer competitive credit terms, you may lose sales to your competitors. Receivable management involves a tradeoff between the benefits of increased sales and the costs of credit (for example, the opportunity cost of funds and defaults by credit customers). Credit and collection policies must be formulated to consider the benefits arising from increasing sales and the costs associated with extending credit. Inventory management involves a tradeoff between the benefits of having sufficient inventory to meet demand and the costs of inventory (for example, the opportunity cost of funds, storage, and obsolescence). Models of inventory management, such as the economic order quantity model and the just-in-time technique, can be used to analyze and minimize the costs of inventory.
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