Corporate Finance BFin 7236 Prof. Andrew Schwartz List Of Fi

Corporate Finance Bfin 7236prof Andrew Schwartzlist Of Financial Rat

Corporate Finance Bfin 7236prof Andrew Schwartzlist Of Financial Rat

Corporate Finance BFIN 7236 Prof. Andrew Schwartz List of Financial Ratios Profitability Ratios 1. Earnings Margin: ð‘ð‘’ð‘¡ ð¼ð‘›ð‘ð‘œð‘šð‘’ ð‘†. ð‘Žð‘™ð‘’ð‘ 2. Gross Margin: (ð‘†ð‘Žð‘™ð‘’ð‘ − ð¶ð‘‚ðºð‘†) ð‘†. ð‘Žð‘™ð‘’ð‘ 3. Operating Margin: ð‘‚ð‘ð‘’ð‘Ÿð‘Žð‘¡ð‘–ð‘›ð‘” ð‘ƒð‘Ÿð‘œð‘“ð‘–ð‘¡ ð‘†. ð‘Žð‘™ð‘’ð‘ 4. Return on Assets: ð‘ð‘’ð‘¡ ð¼ð‘›ð‘ð‘œð‘šð‘’ ð‘´. ð‘£ð‘”.ð‘ ð‘ ð‘’ð‘¡ð‘ 5. Return on Equity: ð‘ð‘’ð‘¡ ð¼ð‘›ð‘ð‘œð‘šð‘’ ð‘´. ð‘£ð‘”. ð¸ð‘žð‘¢ð‘–ð‘¡ð‘¦ Liquidity Ratios 6. Current Ratio: ð¶ð‘¢ð‘Ÿð‘Ÿð‘’ð‘›ð‘¡ ð‘´ð‘ ð‘ ð‘’ð‘¡ð‘ ð¶. ð‘¢ð‘Ÿð‘Ÿð‘’ð‘›ð‘¡ ð¿ð‘–ð‘Žð‘ð‘–ð‘™ð‘–ð‘¡ð‘–ð‘’ð‘ 7. Acid Test (Quick) Ratio: (ð¶ð‘¢ð‘Ÿð‘Ÿð‘’ð‘›ð‘¡ ð‘ ð‘ ð‘’ð‘¡ð‘ − ð¼ð‘›ð‘£ð‘’ð‘›ð‘¡ð‘œð‘Ÿð‘¦) ð¶. ð‘¢ð‘Ÿð‘Ÿð‘’ð‘›ð‘¡ ð¿ð‘–ð‘Žð‘ð‘–ð‘™ð‘–ð‘¡ð‘–ð‘’ð‘ 8. Cash Ratio: (ð¶ð‘Žð‘ â„Ž + ð‘€ð‘Žð‘Ÿð‘˜ð‘’ð‘¡ð‘Žð‘ð‘™ð‘’ ð‘†ð‘’ð‘ð‘¢ð‘Ÿð‘–ð‘¡ð‘–ð‘’ð‘ ) ð¶. ð‘¢ð‘Ÿð‘Ÿð‘’ð‘›ð‘¡ ð¿ð‘–ð‘Žð‘ð‘–ð‘™ð‘–ð‘¡ð‘–ð‘’ð‘ 9. Operating Cash Flow Ratio: ð‘‚ð‘ð‘’ð‘Ÿð‘Žð‘¡ð‘–ð‘›ð‘” ð‘¶ð‘Žð‘ â„Ž ð‘„ð‘œð‘¤ð‘ ð‘¢ð‘Ÿð‘Ÿð‘’ð‘›ð‘¡ ð¿ð‘–ð‘Žð‘ð‘–ð‘™ð‘–ð‘¡ð‘–ð‘’ð‘ Turnover Ratios 10. Inventory Turnover: ð¶ð‘œð‘ ð‘¡ ð‘œð‘“ ðºð‘œð‘œð‘‘ð‘ ð‘†ð‘œð‘™ð‘‘ ð‘£ð‘”. ð¼ð‘›ð‘£ð‘’ð‘›ð‘¡ð‘œð‘Ÿð‘¦ 11. Inventory Days: 365 ∗ ð‘£ð‘”.ð¼ð‘›ð‘£ð‘’ð‘›ð‘¡ð‘œð‘Ÿð‘¦ ð¶. ð‘œð‘ ð‘¡ ð‘œð‘“ ðºð‘œð‘œð‘‘ð‘ ð‘†ð‘œð‘™ð‘‘ 12. Receivables Turnover: ð‘†ð‘Žð‘™ð‘’ð‘ ð‘£ð‘”.ð‘ð‘ð‘ð‘œð‘¢ð‘›ð‘¡ð‘ ð‘…ð‘’ð‘ð‘’ð‘–ð‘£ð‘Žð‘ð‘™ð‘’ð‘ 13. Receivable Days: 365 ∗ ð‘£ð‘”.ð‘ð‘ð‘ð‘œð‘¢ð‘›ð‘¡ð‘ ð‘…ð‘’ð‘ð‘’ð‘–ð‘£ð‘Žð‘ð‘™ð‘’ ð‘†. ð‘Žð‘™ð‘’ð‘ 14. Payables Turnover: ð¶ð‘œð‘ ð‘¡ ð‘œð‘“ ðºð‘œð‘œð‘‘ð‘ ð‘†ð‘œð‘™ð‘‘ ð‘£ð‘”.ð‘ð‘ð‘ð‘œð‘¢ð‘›ð‘¡ð‘ ð‘ƒð‘Žð‘¦ð‘Žð‘ð‘™ð‘’ 15. Payable Days: 365 ∗ ð‘£ð‘”.ð‘ð‘ð‘ð‘œð‘¢ð‘›ð‘¡ð‘ ð‘ƒð‘Žð‘¦ð‘Žð‘ð‘™ð‘’ ð‘†ð‘œð‘ ð‘¡ ð‘œð‘“ ðºð‘œð‘œð‘‘ð‘ ð‘†ð‘œð‘™ð‘‘. 16. Cash Conversion Cycle: ð‘…ð‘’ð‘ð‘’ð‘–ð‘£ð‘Žð‘ð‘™ð‘’ ð‘·ð‘Žð‘¦ð‘ + ð¼ð‘›ð‘£ð‘’ð‘›ð‘¡ð‘œð‘Ÿð‘¦ ð‘·ð‘Žð‘¦ð‘ − ð‘ƒð‘Žð‘¦ð‘Žð‘ð‘™ð‘’ ð‘·ð‘Žð‘¦ð‘ 17. NWC Turnover: ð‘†ð‘Žð‘™ð‘’ð‘ ð‘£ð‘”.ð‘ð‘’ð‘¡ ð‘Šð‘œð‘Ÿð‘˜ð‘–ð‘›ð‘” ð‘¡ð‘œð‘Ÿð‘œ ð‘’𑞠𑜠18. Asset Turnover: ð‘†ð‘Žð‘™ð‘’ð‘ ð‘I𑤠ð‘„ð‘œð‘¡ð‘Žð‘™ ð‘£ð‘”ð‘ „ð‘œð‘¡ ð‘ ð‘’ð‘¡ð‘ . Leverage Ratios 19. Debt-to-Equity Ratio: ð¿ð‘œð‘›ð‘”ð‘‡ð‘’ð‘Ÿð‘š ð‘’ð‘ð‘¡ ð‘‚ð‘¤ð‘’ð‘›ð‘’ð‘Ÿð‘ !ð¸ð‘žð‘¢ð‘–ð‘¡ð‘¦. 20. Leverage Ratio: ð¿ð‘œð‘›ð‘”ð‘‡ð‘’ð‘Ÿð‘š ð‘’ð‘ð‘¡ ð‘ ð‘ ð‘’ð‘¡ð‘ . 21. Interest Coverage Ratio: ð‘‚ð‘ð‘’ð‘Ÿð‘Žð‘¡ð‘–ð‘›ð‘” ð‘ƒð‘Ÿð‘œð‘“ð‘–ð‘¡ ð¼ð‘›ð‘¡ð‘’ð‘Ÿð‘’ð‘ ð‘¡ ð¸ð‘¥ð‘ð‘’ð‘›ð‘ ð‘’. KAE emBalanceSheet into msn.ttem.essm.nnm.si nina24021 T.tnaiuannitiesuwmnteuni.inä¸ç‰æµåŠ¨æ€§å•Š iiiiiiiii ncnzniamuent.mn444 T.tncnn.init.es owning in 4 4 niannniain ciniesminosoiiznsnn.it in Assetsåš ___ 1 86x lining timenear on innerwasoffinancialnone Forevensn.twwent nannieswehave42msn.eswehavesins ofcnn.seofone nnÇŽn 下 AfterpanningbackanmeAfterpainbaekan currentliabilitiesthe remaining ant å•Š assets unity anasnwubeneampaniwerane.mniemgnn.mn in innings debtwimnoiwena.es Formsn.wentinn.ie in ⼀囖 下 AfterpanningbackanmeAfterpainbaekan currentliabilitiesthe remaining ant å•Š assets unity anasnwubeneampaniwerane.mniemgnn.mn in innings debtwimnoiwena.es Formsn.wentinn.ie in ⼀囖 下 AfterpanningbackanmeAfterpainbaekan currentliabilitiesthe remaining ant å•Š assets unity anasnwubeneampaniwerane.mniemgnn.mn in innings debtwimnoiwena.es Formsn.wentinn.ie in ⼀囖 下

Paper For Above instruction

The COVID-19 pandemic has cast unprecedented challenges across all sectors of the economy, fundamentally altering liquidity and solvency dynamics for companies worldwide. In this context, understanding and managing financial ratios related to liquidity and solvency are critical for corporate survival and resilience. This paper explores how sector-specific and cross-sectoral strategies have been employed to sustain operations during the pandemic, with particular attention to liquidity and solvency ratios, including current ratio, quick ratio, debt-to-equity ratio, and interest coverage ratio, among others.

Liquidity management has become paramount amidst the economic uncertainty induced by the pandemic. Companies face heightened liquidity risks due to disruptions in revenue streams, supply chain interruptions, and increased credit risk from customers. The current ratio, which assesses a company's ability to meet short-term obligations with its current assets, has been a crucial indicator during these times. Firms have increasingly relied on liquid assets like cash and marketable securities to improve their current ratios. Additionally, the quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity, particularly useful during times when inventory turnover declines or inventories lose value due to demand shocks.

Furthermore, the cash ratio and operating cash flow ratio have gained significance as measures of short-term liquidity. The cash ratio indicates a company's immediate liquidity position by comparing cash and cash equivalents to current liabilities. During the pandemic, firms have prioritized cash conservation and liquidity buffers to mitigate the risk of insolvency. For instance, Marriott International and Carnival Cruise Lines have focused on strategic liquidity management via debt issuance and asset sales to enhance their cash reserves. This approach ensures that companies can cover immediate liabilities and continue operating even under revenue constraints.

On the solvency front, the pandemic has pushed many companies into high leverage scenarios, increasing reliance on debt financing. The debt-to-equity ratio provides insight into the degree of financial leverage used by a company, indicating potential solvency risk if debt levels become unsustainable. The interest coverage ratio, which measures a firm's ability to meet interest payments with its operating income, has become a critical indicator of long-term solvency during the crisis. Companies like airlines, which faced significant revenue decline, have had to negotiate with creditors, restructure debt, or seek government aid to maintain their interest coverage ratios within acceptable limits.

Cross-sector strategies for managing solvency emphasize balancing debt and equity while maintaining operational efficiency. For example, Carnival Cruise Lines raised debt to fund liquidity needs, as detailed from minutes 13-18, while also exploring equity issuance (minutes 5-7) to avoid over-leverage. Similarly, Marriott International has managed its balance sheet proactively to sustain liquidity, reducing long-term liabilities and focusing on operational cash flow generation to improve solvency ratios.

The pandemic has also underscored the importance of asset management and turnover ratios. Inventory turnover and receivables turnover ratios have become vital in assessing how efficiently companies manage their working capital under stressed conditions. Higher inventory turnover and faster receivables collections enhance liquidity by freeing up cash. Conversely, longer receivable days and reduced inventory turnover duration pose risks to liquidity and solvency. For example, airlines and hotels have experienced extended receivable days, reflecting delays in cash collection from customers or travel partners, thereby straining cash flows.

Additionally, the cash conversion cycle, which incorporates inventory days, receivable days, and payable days, has proven to be a key metric in managing liquidity. Companies aim to shorten this cycle, delaying payments while accelerating collections, to maximize cash on hand. For instance, airlines have extended payable days to preserve cash, but this strategy must be balanced against maintaining supplier relationships.

In conclusion, the ongoing COVID-19 pandemic has accentuated the importance of robust liquidity and solvency management across sectors. Effective use of financial ratios informs strategic decisions on debt issuance, asset sales, and operational adjustments necessary for survival during prolonged periods of economic disruption. Companies that maintain a balanced approach to liquidity and leverage, emphasizing flexibility in working capital management, have a better chance of navigating the crisis successfully and emerging resilient in the post-pandemic economy.

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