Accounting / July 16, 2018 / Khloe Santiago
A reader recently asked about debt to cash flow ratios when analyzing a stock, but before addressing that question, perhaps it is best to start with a definition of this staple of fundamental analysis.
A Cash receipts journal is a specialized accounting journal and it is referred to as the main entry book used in an accounting system to keep track of the sales of items when cash is received, by crediting sales and debiting cash and transactions related to receipts. Sales on account are booked instead in the sales journal.
If the stock does poorly, however, the investor won’t be able to convert the security to stock and will only have the yield to show for his or her investment. But unlike stock, convertible bonds can only fall so far – provide the issuing company remains solvent – since they have a specific maturity date at which time investors will receive their principal. In this sense, convertible bonds have more limited downside than common stocks.
The Days' Sales in Inventory ratio tells the business owner how many days, on average, it takes to sell inventory. The usual rule is that the lower the DSI is the better because it is better to have inventory sell quickly than to have it sit on your shelves.
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