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RISK ANALYSIS
LIQUIDITY AND SOLVENCY
11
Receivables turnover =
Days receivables
outstanding
Receivables turnover
10
Inventory turnover =
365
Inventory turnover
11
12
Purchases
A/P turnover =
Average accounts payable
Days A/P outstanding =
365
A/P turnover
13
Revenues
Average cash balance
365
Revenue to cash ratio
14
Debt ratios
Interest coverage
Operating cash flow to total liabilities
Operating cash flow to capital expenditures
15
Debt/Equity ratio =
Liabilities/Assets =
16
17
Interest coverage =
19
20
21
22
Problem 5.10
Case 5.1
23