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Accounts Turn over Rate

In: Business and Management

Submitted By mbocachica
Words 348
Pages 2
Why the accounts receivable turnover rate and accounts payable turnover rate would be of interest in the decision making.
Account payable turnover ratio is very important at the time of making decision because it will give me an idea of how quickly a company pays off its vendors. This way we can analyze and decide if we can let them borrow some money.
Account payable turnover ratio is a liquidity ratio that shows a company’s ability to pay off its account payable. This can be done comparing net credit purchases to the average accounts payable during the period.
This can help us to analyze the liquidity of the company by gauging how easily accompany can pay its suppliers, vendors and of course repay the amount I invested in the company.
What key factors you would evaluate on the statement of cash flows and what significance the income from operations line item has on your decision.
The balance sheet shows how much debt a company has and how the company is doing to repay this debt. There is so much information on the income statements that these documents are the most critical pieces of information we as investors will gt from individuals or companies. These document will give us (investors) a better grip on what’s going on with the company we invested money in.
The income from operations line shows the company’s earnings from its normal operations before any non operating income and/or cost. Example of these are interest expense and taxes.
Also as an investor, I would pay special attention to the earnings and revenue growth. This can tell me how much the company earns and whether its increasing its sales or it’s growth is declining.

Why meaningful insight you might obtain by reviewing the sales allowances and sales discounts amounts for this company
Reviewing these we can identify what we need to change or modify in our products in order to...

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