레이블이 Debt to Total Assets인 게시물을 표시합니다. 모든 게시물 표시
레이블이 Debt to Total Assets인 게시물을 표시합니다. 모든 게시물 표시

2013년 11월 28일 목요일

About 'total debts to assets ratio'|Finance :: Leverage Ratio :: Debt-to-Equity Ratio







About 'total debts to assets ratio'|Finance :: Leverage Ratio :: Debt-to-Equity Ratio








House               of               Representatives               did               not               pass               the               Emergency               Economic               Stabilization               Act               bill               today.

Speaker               Nancy               Pelosi's               untimely               attack               on               Bush,               with               whom               she               cooperated               in               finalizing               the               draft               during               the               weekend,               made               many               Republicans               grow               cold               feet.

So               today,               when               the               bill               was               put               vote,               it               failed               to               muster               the               required               majority               of               218.

While               228               voted               for               it,               205               voted               against               it.

For               the               market,               it               was               almost               a               foregone               conclusion               that               it               would               be               passed,               based               on               the               bipartisan               camaraderie               shown               in               the               weekend.
               And               when               the               market's               expectations               were               belied,               it               reacted               violently.

The               Nasdaq               and               S&P               500's               fell               by               the               largest               points               since               the               1987               Black               Monday.

Dow               Jones               Industrial               Average's               (DJIA)               slide               was               surpassed               only               by               the               fall               in               the               wake               of               the               9/11               attacks.
               Global               markets               too               reacted               by               sliding               4-5%               be               it               European               or               Asian               markets.
               Even               the               fact               that               the               Fed               and               nine               other               central               banks               pumped               in               $620               bln               overnight               to               assure               liquidity               in               the               banking               system,               was               not               noticed.
               In               UK,the               mortgage               lender               Bradford               &               Bingley               was               nationalized.

Their               deposit               taking               branches               are               to               be               acquired               by               Spain's               Bank               Santander               (STD).

Belgium,               Netherlands               and               Luxembourg               took               a               combined               $16               bln-stake               of               49%               in               Fortis               bank               in               a               similar               bail-out               move.

Iceland's               Glitnir               and               Germany's               Hypo               also               had               money               infusions               from               their               respective               governments.
               With               European               currencies               falling,               US               dollar               was               the               obvious               beneficiary.
               Economic               Data:
               Personal               consumption               expenditures               (PCE)               for               the               month               of               August               -               Total               spending               was               unchanged               though               analyst               forecast               was               for               an               increase               of               2%.


               Personal               income               saw               a               meager               increase               of               0.5%               but               it               was               still               higher               than               the               consensus               forecast               of               .
               September               Farm               Prices               Index               -               fell               by               -1.3%               from               August.

The               Crop               Index               fell               by               -1.7%               and               the               Livestock               Index               by               -2.2%.
               Emergency               Economic               Stabilization               Act               Bill:
               Yes,               that               is               the               name               of               the               Bush's               financial               recovery               plan.

Some               of               the               clauses               in               the               bill               include:               
               stricter               regulatory               oversight,               limiting               executive               compensation,               relief               from               foreclosure,               purchasing               illiquid               assets               using               the               $700               to               be               allocated               in               three               tranches               of               $250,               $100               and               $350               under               supervision.
               One               important               clause               allows               Fed               to               reward               higher               reserve               holding               banks               by               paying               interest               on               that               amount.
               CBOE               Volatility               Index               (VIX)               soared               through               nearly               12               points               to               46.72.
               Oil               fell               by               $-10.52               (-9.84%)               to               $96.37.
               Gold               being               the               safe               haven               alternative               in               times               like               this,               went               up               by               $5.90               (0.66%)               to               $894.40.
               Government's               Treasury               bonds               too               are               hot               favorites               now.
               Market               indices:
               Dow               went               DOWN               by               -777.68               (-7.50%)               to               10365.45               
               SP               500               DOWN               by               -106.59               (-9.63%)               to               1106.42               
               Nasdaq               DOWN               by               199.61               (-10.06%)               to               1983.73
               NYSE               :
               Daily               volume:               1.86               bln               
               A/D               Ratio:               163               stocks               advanced               against               3109               declined               
               52-weeks               Hi/Lo:               Only               14               stocks               attained               new               Highs               while               970               stocks               made               it               down               to               new               Lows
               Nasdaq:
               Daily               volume:               2.82               bln               
               A/D               Ratio:               414               stocks               advanced               against               2572               declined               
               52-week               Hi/Lo:               21               stocks               topped               new               Highs               while               705               stocks               set               new               Lows
               Market's               fall               today               spread               though               all               of               its               sectors.
               Bain               Capital               and               Hellman               &               Friedman               are               acquiring               Lehman               Brother's               troubled               Neuberger               Berman               division               for               $2.15               bln.
               Japan's               Mitsubishi               UFJ               (MTU)               is               to               acquire               a               20%               stake               in               Morgan               Stanley               (MS)               for               $9               bln.
               Details               of               Citibank's               acquisition               of               Wachovia               business:               
               Citigroup's               total               outlay               in               acquiring               Wachovia               is               around               $2.2               bln.

That               covers               $700               bln               operational               assets               and               liabilities               and               $53               bln               senior               and               subordinated               debts.

The               FDIC               will               absorb               any               losses               beyond               $42               bln               that               arises               out               of               the               mortgage               portfolio               worth               $312               bln               which               Citi               assumed.

Citi               is               allowed               to               issue               $10               bln               common               stock               to               public.
               Company               Results:
               Walgreen               (WAG)               produced               quarterly               earnings               that               conformed               to               the               analyst's               expectations.

Circuit               City's               (CC)               earnings               were               disappointing.
               Analyst's               Ratings:
               Upgraded               stocks               are:
               BorgWarner               Inc(BWA),               Brookfield               Infrastructure               Partners               (BIP),               
               Canadian               Imperial               Bank               of               Commerce               (CM),               National               City               Corp               (NCC),               Nortel               Networks               Corp               (NT),               PMFG               Inc               (PMFG),               Sovereign               Bancorp               (SOV),               Take-Two               Interactive               Software               (TTWO),               Ticketmaster               (TKTM)               and               Tellabs               Inc               (TLAB).
               Downgraded               stocks               include:
               Apple               (AAPL),               Brookline               Bancorp               (BRKL),               Citrix               Systems               (CTXS),               Comcast               Corp               (CMCSA),               Coeur               d'Alene               Mines               (CDE),               Concur               Technologies               (CNQR),               DISH               Network               (DISH),               Freeport-McMoRan               Copper               &               Gold               (FCX),               Motorola               Inc               (MOT),               Research               In               Motion               Ltd               (RIMM),               Sadia               SA               (SDA),               Sprint               Nextel               Corp               (S),               Strategic               Hotels               &               Resorts               (BEE),               Thor               Industries               (THO),               Vasco               Data               Security               International               (VDSI)               and               Winnebago               Industries               (WGO).
               Credit               is               hard               to               come               by               for               even               banking               institutions.

So               they               are               charging               each               other               more               than               4%               for               just               an               "overnite"               loan.
               Where               did               all               this               trouble               start?
               For               a               change,               the               answer               comes               from               Canadian               prime               minister               Harper               (comments               after               the               hyphens               are               mine)               :
               1.

poor               oversight               -               self-governed               doesn't               mean               not               governed.


               2.

cheap               credit               -               lying               about               the               applicant's               income               and               capacity               to               return               the               loan               
               3.

tax               sops               that               give               rise               to               housing               bubbles               -               encouraging               people               to               leverage               too               much               
               4.

Ignoring               early               warning               signs               -               yeah,               anybody               who               had               the               nerve               to               warn               was               intimidated               by               accusations               of               conspiracy               theory               or               doomsday               prophesy
               Before               calling               our               northern               neighbor               a               traitor               or               backstabber,               remember               he               is               just               telling               the               truth.
               Yes,               truth               can               be               unsavory               and               uncomfortable.






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    2013년 11월 26일 화요일

    About 'total assets to total liabilities ratio'|... a price to book ratio of 1, or a trailing...target price attempts to be conservative in estimating...publication accepts any liability whatsoever for any loss or damage...







    About 'total assets to total liabilities ratio'|... a price to book ratio of 1, or a trailing...target price attempts to be conservative in estimating...publication accepts any liability whatsoever for any loss or damage...








    Hewlett               Packard               Hewlett               Packard               has               become               one               of               the               largest               Electronics               Companies               in               the               World.

    The               Company               was               established               in               1939               by               Bill               Hewlett               and               David               Packard               in               Paolo               Alto,               California.

    The               companies               specialize               in               the               production               of               personal               computers,               servers,               storage               devices,               printers,               networking               equipment,               Computer               monitors,               digital               cameras,               digital               imaging               equipment,               digital               media               equipment,               printers               and               more.

    The               future               of               Hewlett               Packard               seem               bright               with               is               annual               revenue               increasing               by               more               than               6               million               dollars               in               2004.

    Hewlett               Packard's               assets               outweigh               it's               liabilities               with               a               current               ratio               of               1.8               which               means               greats               things               for               there               share               holders.

    There               dividend               payout               it               that               of               $.32               per               share               and               that               is               projected               to               raise               by               $.3               by               the               end               of               the               2006               fiscal               year.

    Hewlett               Packard               recently               acquired               Compaq               computers               which               should               aid               in               strengthening               there               financial               outlook               by               the               end               of               2006               and               even               though               there               merger               met               with               some               opposition               it               was               proven               to               be               very               profitable               for               the               company               and               its               shareholders.

    All               in               all               Hewlett               Packard               is               posting               great               numbers               and               is               positioning               itself               to               be               a               very               promising               investment.
                   
                   NYSE               Symbol:               HPQ
                   Fiscal               Year               End:               October
                   2004               Sales               (mil):               $79,905.00
                   2004               Employees:               151,000
                   Current               Ratio:               1.43
                   Asset               Turnover               Ratio:               1.1
                   Total               Debt               to               Total               assets               Ratio:               0.50
                   Price/Earning               Ratio:               28.53
                   Dividend               Payout:               27.8%
                   Sanyo
                   Sanyo               produces               consumer               and               commercial               electronics.

    Sanyo               has               more               than               170               subsidiaries               throughout               the               world.

    They               create               things               ranging               from               electric               bicycles               to               semi               conductors.

    They               also               produce               items               such               as               CD               players,               Televisions,               Appliances,               Cell               phones,               Batteries               and               more.

    Sanyo               has               been               struggling               a               bit               financially               within               the               past               year               its               total               revenue               increased               by               a               mere               $350,000               in               the               year               2004.

    However               its               assets               outweigh               it's               liabilities               with               a               current               ratio               of               1.78.

    There               debt               to               assets               ratio               is               average               which               helps               to               keep               Sanyo               in               the               running.

    Sanyo               can               be               a               great               investment               with               shares               costing               about               $11.36               per               share               and               dividend               payout               of               about               $.12               per               share.

    This               is               set               to               decrease               slightly               by               the               end               of               the               fiscal               year.

    Sanyo's               future               is               still               however               very               promising               with               recent               alliances               with               Companies               such               as               Samsung,               Sharp,               Seiko               Epson               and               others.

    I               would               say               definitely               keep               Sanyo               on               your               watch               list.
                   NASDAQ               Symbol:               SANYY
                   Fiscal               Year               End:               March
                   2005               Sales               (mil):               $25,173.7
                   2004               Employees:               82,337
                   Current               Ratio:               1.09
                   Asset               Turnover               Ratio:               1.0
                   Total               Debt               to               Total               Assets               Ratio:               0.89
                   Price/Earning               Ratio:               -               -
                   Dividend               Payout:               -
                   
                   Sony               
                   Sony               is               one               of               leading               electronics               companies               in               the               world.

    However               electronics               is               just               the               tip               of               the               iceberg               for               this               multifaceted               company.

    With               ties,               to               music,               movies,               and               home               of               one               the               most               popular               gaming               consoles               (PlayStation               2)               ever               Sony               is               a               force               to               be               reckoned               with               Sony               appears               to               be               one               of               the               main               front               runners               of               the               game               console               division,               however               sales               of               other               products               like               there               DVD               recorders,               digital               cameras,               music               and               others               have               dropped.

    Thanks               to               competitors               like               Apple               and               its               Ipod               as               well               as               Samsung               and               its               entire               consumer               electronics               line.

    Sony               is               seemingly               being               left               in               the               dust.

    Sony's               revenue               dropped               by               more               than               6               million               dollars               in               the               year               2004               and               projections               are               not               looking               good               for               the               end               of               the               2005               fiscal               year.

    Assets               however               outweigh               liabilities               with               a               current               ratio               of               1.19               however               that               number               is               expected               to               decrease               by               the               end               of               the               2006               fiscal               year               which               could               mean               serious               financial               trouble               for               the               Sony               corporation.

    Hopefully               the               launch               of               the               new               Play               Station               will               breathe               some               life               into               this               company               but               until               then               I               suggest               you               steer               clear               of               Sony.
                   NYSE               Symbol:               SNE
                   Fiscal               Year               End:               March
                   2004               Sales               (mil):               $66,912
                   2004               Employees:               162,000
                   Current               Ratio:               1.19
                   Asset               Turnover               Ratio:               0.8
                   Total               Debt               to               Total               Assets               Ratio:               0.70
                   Price/Earning               Ratio:               31.90
                   Dividend               Payout:               15.1%
                   The               most               promising               company               out               of               these               three               electronics               giants               appears               to               be               Hewlett               Packard.

    With               it's               promising               numbers,               successful               mergers,               and               increasing               revenue.

    HP               shares               go               for               about               $29               a               pop               and               they               are               expected               to               rise               over               the               holiday               season.

    HP               also               has               few               more               tricks               up               its               sleeves               to               help               increase               sales               and               beef               up               profit.

    I               tried               to               find               out               just               what               they               were               but               everything               appears               to               be               on               the               extreme               hush,               hush.

    Basically               HP               appears               to               be               the               more               solid               and               promising               choice,               I               would               personally               invest               in               this               company.

    My               verdict               Hp               all               the               way!






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    2013년 11월 24일 일요일

    About 'debt to total assets ratio interpretation'|Debt Rattle, December 20 2008: War in the Labour Markets







    About 'debt to total assets ratio interpretation'|Debt Rattle, December 20 2008: War in the Labour Markets








    Financial               ratios               are               the               comparative               values               which               are               used               to               scrutinize               and               keep               an               eye               on               a               company's               performance.

    An               analysis               of               financial               statements               is               based               on               these               ratios               in               a               ratio               analysis.

    A               company               obtains               the               basic               data               for               its               ratio               analyses               from               its               own               income               statement               and               balance               sheet.

    A               ratio               analysis               is               the               interpretation               of               the               ratio               value               -               what               it               means.

    There               are               two               types               of               ratio               comparisons               that               can               be               made:               cross-sectional               and               time-series.

    (Gitman,               2009,               p.

    54)               Cross-sectional               analysis               is               the               comparing               of               one               company's               financial               ratio(s)               to               another               company's               financial               ratio(s)               when               both               companies               are               in               the               same               industry.

    These               analysis               entail               a               comparison               at               the               same               point               in               time.

    For               example,               Microsoft               may               want               to               compare               its               total               liabilities               to               net               worth               ration               to               that               of               Apple.

    Chevron               may               want               to               compare               its               return               on               total               assets               ratio               to               that               of               Exxon.

    Cross-sectional               analysis               can               also               include               the               comparing               of               a               company's               financial               ratio               to               the               industry               average               financial               ratios.

    When               there               is               a               noteworthy               deviation               to               the               positive               or               negative               side               of               the               industry               average,               then               this               needs               to               be               investigated.

    Even               a               high               deviation               to               the               positive               side               can               spell               trouble.

    (p.

    54)
                   Time-series               analysis               examines               a               company's               financial               performance               over               time.

    By               comparing               the               present               to               past               performance,               via               ratios,               analysts               can               assess               a               company's               development.

    Positive               and               negative               trends               can               be               exposed               by               using               multiyear               comparisons.

    A               large               problem               may               be               revealed               through               any               striking               year-to-year               changes.

    (p.

    56)
                   As               with               most               methods               of               various               types               of               methods               used               in               the               world               today,               there               is               also               a               hybrid               method               of               cross-sectional               analysis               and               time-series               analysis,               simply               referred               to               as               combined               analysis.

    Combined               analysis               is               considered               the               most               functional               way               to               use               ratio               analysis.

    Utilizing               this               combined               view,               analysts               are               able               to               evaluate               any               trends               in               the               behavior               of               the               ratios               in               relation               to               trends               in               the               industry.

    (p.

    56)
                   Financial               ratios               can               be               divided               into               five               categories:               liquidity,               activity,               debt,               profitability,               and               market               ratios.

    To               gauge               risk,               analysts               use               liquidity,               activity,               and               debt               ratios.

    To               calculate               return,               analysts               choose               profitability               ratios.

    To               quantify               both               risk               and               return,               analysts               opt               for               market               ratios.
                   There               are               two               types               of               liquidity               ratios:               current               ratio               and               quick               (acid-test)               ratio.

    The               current               ratio               is               one               of               the               most               commonly               referenced               financial               ratios               as               it               gauges               a               company's               capability               to               meet               its               short-term               commitments.

    It               is               derived               by               dividing               the               present               assets               of               the               firm               by               the               firm's               present               liabilities.

    Most               often,               the               higher               the               current               ratio,               the               more               liquid               the               firm               is               thought               to               be.

    A               current               ratio               of               2.0               is               infrequently               named               satisfactory.

    However,               a               value's               suitability               is               dependent               upon               the               industry               in               which               the               company               operates.

    The               quick               (acid-test)               ratio               is               analogous               to               the               current               ratio               except               that               it               does               not               include               inventory,               which               is               most               often               the               least               liquid               current               asset.

    The               quick               ratio               is               calculated               by               subtracting               the               firm's               inventory               from               its               current               assets               and               then               dividing               that               resulting               number               by               the               firm's               current               liabilities.

    A               quick               ratio               of               1.0               or               higher               is               intermittently               recommended,               but,               just               like               the               current               ratio,               what               value               is               considered               adequate               is               for               the               most               part               dependent               on               the               industry.

    The               quick               ratio               is               a               better               gauge               of               by               and               large               liquidity               only               when               a               company's               inventory               cannot               be               simply               transformed               into               cash.

    If               inventory               is               liquid,               then               the               current               ratio               is               the               favored               measurement               of               on               the               whole               liquidity.

    (p.

    58-59)
                   There               are               four               types               of               activity               ratios               -               inventory               turnover,               average               collection               period,               average               payment               period,               and               total               asset               turnover               -               which               measure               the               quickness               with               which               different               accounts               are               transformed               into               sales               or               cash.

    Inventory               turnover               typically               measures               the               movements,               or               liquidity,               of               a               company's               inventory               by               dividing               the               cost               of               goods               sold               by               the               inventory.

    The               turnover               amount               that               is               the               result               is               only               important               when               it               is               contrasted               with               that               of               other               companies               in               the               same               industry               or               to               the               company's               past               inventory               turnover.

    The               average               collection               period,               or               average               age               of               accounts               receivable,               is               valuable               in               evaluating               credit               and               collection               policies.

    To               obtain               this               value,               the               accounts               receivable               is               divided               by               the               average               sales               per               day               (annual               sales               divided               by               365).

    The               resulting               number               will               signify               how               many               days               it               takes               to               collect               an               account               receivable,               on               average.

    If               a               company               has               30-day               credit               terms               with               its               clients               and               they               have               an               average               collection               period               value               of               55,               then               that               may               be               an               sign               of               an               inadequately               managed               credit               or               collection               division.

    If               the               company               finds               that               a               60-day               credit               term               would               be               worthwhile,               then               the               55               days               would               then               become               satisfactory.

    The               average               payment               period,               or               average               age               of               accounts               payable,               is               calculated               just               like               the               average               collection               period,               except               you               are               dividing               accounts               payable               by               the               average               purchases               per               day               (annual               purchases               divided               by               365).

    This               is               a               tricky               value               to               determine               because               a               company's               annual               purchases               is               not               presented               in               financial               statements.

    Therefore,               purchases               are               typically               an               approximation               as               a               given               percentage               of               cost               of               goods               sold.

    This               value               is               significant               only               in               relation               to               the               average               credit               terms               given               to               a               company.

    When               a               company               is               applying               for               credit,               creditors               will               be               most               interested               in               this               value               because               it               provides               a               good               look               into               how               a               company               pays               its               bills.

    If               the               average               payment               period               is               10               days               and               the               company               has               30-day               terms               across               the               board,               then               their               credit               rating               will               be               much               higher               than               if               the               value               was               50.

    The               total               asset               turnover               shows               the               efficiency               with               which               a               company               uses               its               assets               to               produce               sales.

    This               value               is               derived               by               dividing               sales               by               total               assets.

    Most               often,               the               higher               a               company's               total               asset               turnover,               the               more               resourcefully               its               material               goods               have               been               used.

    Total               asset               turnover               is               probably               the               most               important               ratio               to               management               as               it               shows               if               a               company's               actions               have               been               financially               efficient.

    (p.

    59-62)
                   Debt               ratios               offer               analysts               the               ability               to               see               the               quantity               of               money               a               company               is               using               to               produce               profits               that               is               coming               from               outside               sources.

    There               are               three               types               of               debt               ratios:               debt               ratio,               times               interest               earned               ratio,               and               fixed-payment               coverage               ratio.

    The               debt               ratio               measures               the               fraction               of               total               assets               financed               by               the               company's               creditors.

    This               is               calculated               by               dividing               total               liabilities               by               total               assets               and               the               higher               the               resulting               number,               the               greater               the               amount               of               outside               money               is               being               used               to               produce               profits.

    The               times               interest               earned               ratio               gauges               a               company's               ability               to               make               agreed               upon               interest               payments.

    This               is               calculated               by               dividing               earnings               before               interest               and               taxes               by               interest               and               the               higher               the               resulting               value,               the               more               capable               the               company               is               to               carry               out               its               interest               responsibilities.

    A               resulting               number               of               at               least               3.0               is               often               recommended,               although               5.0               is               the               more               preferred               value.

    The               fixed-payment               coverage               ratio               measures               a               company's               ability               to               meet               all               its               fixed-payments               commitments,               such               as               lease               payments,               loan               interest               and               principal,               and               preferred               stock               dividends.

    Just               like               with               the               times               interest               earned               ratio,               the               higher               the               resulting               value,               the               better.

    To               calculate               this,               the               sum               of               earnings               before               interest               &               taxes               and               lease               payments               is               divided               by               the               sum               of               interest,               lease               payments,               and               the               product               of               the               sum               of               principal               payments               and               preferred               stock               dividends               and               1               divided               by               1               minus               the               corporate               tax               rate               applicable               to               the               company's               income.

    (p.

    62-65)
                   Profitability               ratios               allow               analysts               to               measure               a               company's               profits               with               regards               to               a               given               amount               of               sales,               particular               amount               of               assets,               or               the               owner's               investment.

    There               are               seven               profitability               ratios:               common-size               income               statements,               gross               profit               margin,               operating               profit               margin,               net               profit               margin,               earnings               per               share               (EPS),               return               on               total               assets               (ROA),               and               return               on               common               equity               (ROE).

    A               common-size               income               statement               is               an               income               statement               where               each               item               is               shown               as               a               proportion               of               sales.

    The               gross               profit               margin               measures               the               fraction               of               every               sales               dollar               after               a               company               has               paid               for               its               merchandise.

    This               value               is               derived               by               dividing               the               remainder               of               sales               minus               cost               of               goods               sold               by               sales.

    The               operating               profit               margin               measures               the               proportion               of               every               sales               dollar               left               over               after               all               costs               and               expenses,               not               including               interest,               taxes,               and               preferred               stock               dividends,               are               removed.

    This               is               calculated               by               dividing               operating               profits               by               sales.

    The               net               profit               margin               measures               the               percentage               of               every               sales               dollar               left               over               after               all               costs               and               expenses,               this               time               including               interest,               taxes,               and               preferred               stock               dividends,               have               been               subtracted.

    This               is               calculated               by               dividing               earnings               available               for               common               stockholders               by               sales.

    The               EPS               characterizes               the               dollar               quantity               earned               on               the               part               of               every               outstanding               share               of               common               stock.

    It               is               calculated               by               dividing               earnings               available               for               common               stockholders               by               the               number               of               shares               of               common               stock               outstanding.

    The               ROA               measures               the               on               the               whole               effectiveness               of               a               company's               management               in               producing               profits               with               its               accessible               assets.

    This               is               derived               by               dividing               the               earnings               available               for               common               stockholders               by               the               total               assets.

    The               ROE               gauges               the               return               earned               on               the               common               stockholders'               investment               in               the               company.

    This               is               calculated               by               dividing               the               earnings               available               for               common               stockholders               by               the               common               stock               equity.

    (p.

    65-69)
                   Market               ratios               compare               a               company's               market               value               to               particular               accounting               costs,               as               measured               by               its               present               share               price.

    There               are               two               market               ratios:               price/earnings               (P/E)               ratio               and               market/book               (M/B)               ratio.

    The               P/E               ratio               measures               the               quantity               that               investors               are               prepared               to               pay               for               each               dollar               of               a               company's               earnings.

    With               a               higher               P/E               ratio               comes               higher               investor               assurance.

    This               is               calculated               by               dividing               the               market               price               per               share               of               common               stock               by               the               earnings               per               share.

    The               M/B               ratio               gives               an               evaluation               of               how               investors               see               a               company's               performance.

    In               order               to               calculate               the               M/B               ratio,               the               book               value               per               share               of               common               stock               must               first               be               calculated,               which               is               done               by               dividing               common               stock               equity               by               the               number               of               shares               of               common               stock               outstanding.

    Then,               to               figure               out               the               M/B               ratio,               the               market               price               per               share               of               common               stock               is               divided               by               the               book               value               per               share               of               common               stock.

    (p.

    69-70)
                   All               of               these               financial               ratios               can               be               utilized               to               give               an               idea               of               the               financial               strength               of               a               company.

    Managers               can               use               these               numbers               to               evaluate               their               own               processes,               policies,               and               performance.

    Potential               investors               can               utilize               these               numbers               to               decide               whether               or               not               they               want               to               invest.

    Potential               creditors               can               base               their               decisions               on               whether               to               extend               credit               off               of               these               financial               ratios.

    Ratios               are               an               easy               way               to               compare               two               companies               in               the               same               industry               as               well               as               an               easy               way               for               a               company               to               measure               itself               against               its               own               past               performance.
                   References
                   Gitman,               L.

    (2009).

    Principles               of               Managerial               Finance               (12th               ed.).

    Pearson               Prentice               Hall:               Boston,               MA






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