HRT 374 Lecture Notes - Lecture 5: Asset Turnover, Inventory Turnover, Quick Ratio

• School: Cal Poly Pomona
• Department: Hospitality Management
• Course: HRT 374
• Professor: John Self

Document Summary

Compared to prior period or other places. Management can measure its progress or lack of progress toward goals. How quickly can you covert asset to cash. Financed by debt and is able to meet its long term obligation. Management"s ability to use the property"s assets. Management"s overall effectiveness as measured by returns on sales and investments. Assist in analysis of hospitality establishment operations. Low current ratio- owners/ stockholders normally prefer because stockholders view investments in most current assets as less productive. High current ratio- creditors normally prefer as it will provides assurance that they will receive timely payments. Cash+short-term investments+market sec+notes and accounts receivable/current liabilities. Almost no difference between current ratio and acid test ratio. Measure the company"s ability to pay off long term debt. Larger than 1= more debt than equity. For each of oe, the company owes . 27. Measures management"s effectiveness in using its resources. Concept- the more turnover, the more cash.