HBR 20-Minute Manager Boxed Set (10 Books) (HBR 20-Minute Manager Series)

Finance Basics

104

Current assets. Those assets that are most easily con-

verted into cash, including cash on hand, accounts re-

ceivable, and inventory.

Current ratio. A comparison of a company’s current

assets with its current liabilities. To calculate, divide

total current assets by total current liabilities.

Days payable outstanding. A measure indicating how

many days it takes, on average, for a company to pay

its suppliers. To calculate, divide accounts payable by

cost of goods sold per day.

Days sales outstanding. A measure indicating how

long it takes, on average, for a company to collect its

receivables. To calculate, divide accounts receivable

by revenue per day.

Debt. Money owed to a creditor.

Debt-to-equity ratio. A comparison of a company ...