... The loan officer stated there would be no problem obtaining a loan to pay off the accounts payable accounts provided Venice InLine had a current ratio above 2.0, an acid-test ratio above 1.0, and net operating income that was at least four times the interest on the proposed loan. The current ratio measures the ability to pay sort-term debt. The acid-test ratio is calculated to show the short-term debt paying ability without relying on inventory. The operating income in excess of interest will also show the ability to pay. Based on these three tests, the company would not qualify for the loan because it does not meet the required ratio two of the three measurements. Below are the calculations. a. Current Ratio. The calculation for the current ratio is current assets divided by current liabilities. In this case, the calculation for the current year would be $290,000/$164,000. This equals a current ratio of 1.77. For the prior year, the calculation would be $302,000/$100,000 for a ratio of 3.02. Since the rate has dropped in the year, this would indicate deteriorating financial conditions, which we knew since the company could not make holiday deliveries. However, since the ratio is below 2.0 as required by the bank, the loan would not be approved for this measurement. b. Acid-test Ratio. The calculation for the acid-test ratio is (Cash + marketable securities + accounts receivable + short-term notes receivable) divided by current liabilities. For this company, the numbers...
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...The Nonsynonymous/Synonymous Substitution Rate Ratio versus the Radical/ Conservative Replacement Rate Ratio in the Evolution of Mammalian Genes Kousuke Hanada,* Shin-Han Shiu, and Wen-Hsiung Li* *Department of Ecology and Evolution, University of Chicago; and Department of Plant Biology, Michigan State University There are 2 ways to infer selection pressures in the evolution of protein-coding genes, the nonsynonymous and synonymous substitution rate ratio (KA/KS) and the radical and conservative amino acid replacement rate ratio (KR/KC). Because the KR/KC ratio depends on the definition of radical and conservative changes in the classification of amino acids, we develop an amino acid classification that maximizes the correlation between KA/KS and KR/KC. An analysis of 3,375 orthologous gene groups among 5 mammalian species shows that our classification gives a significantly higher correlation coefficient between the 2 ratios than those of existing classifications. However, there are many orthologous gene groups with a low KA/KS but a high KR/KC ratio. Examining the functions of these genes, we found an overrepresentation of functional categories related to development. To determine if the overrepresentation is stage specific, we examined the expression patterns of these genes at different developmental stages of the mouse. Interestingly, these genes are highly expressed in the early middle stage of development (blastocyst to amnion). It is commonly thought that developmental genes...
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...Insurance Classification Insurance classification is the method insurance companies use to put potential insured clients into groups which are based on varying levels of risk and whether they should be covered by insurance, the cost and length. Some factors used to determine the terms are age, sex, marital status and occupation. This is also similar to how classes are divided in society. Those who have more wealth are usually given higher statuses. Similarly, insurance companies give better coverage to those who pay higher premiums. When determining loss during insurance classification information is collected in a database, factors such as life expectancy are predicted, and ratios are used to calculate expected loss. The actual loss is calculated for each insured person. A person pays an insurance premium for a period of time. When he or she has claims these are considered to be losses. A loss ratio is a ratio of losses to premiums. If the loss ratio is high that means that the insurance holder was charged too little for their premiums. If it is low then the policy holder was charged too much. In order to compete with other companies insurance companies have to offer lower premiums. So the insurance company has to pass on the additional cost to other policy holders. This leads to high losses. As a result, the insurance company will have to pay more money for the claims and will not have much left. In order, to cover...
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...adapted and updated from E. Altman, “Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy,” Journal of Finance, September 1968; and E. Altman, R. Haldeman and P. Narayanan, “Zeta Analysis: A New Model to Identify Bankruptcy Risk of Corporations,” Journal of Banking & Finance, 1, 1977. Predicting Financial Distress of Companies: Revisiting the Z-Score and ZETA® Models Background This paper discusses two of the venerable models for assessing the distress of industrial corporations. These are the so-called Z-Score model (1968) and ZETA® 1977) credit risk model. Both models are still being used by practitioners throughout the world. The latter is a proprietary model for subscribers to ZETA Services, Inc. (Hoboken, NJ). The purpose of this summary are two-fold. First, those unique characteristics of business failures are examined in order to specify and quantify the variables which are effective indicators and predictors of corporate distress. By doing so, I hope to highlight the analytic as well as the practical value inherent in the use of financial ratios. Specifically, a set of financial and economic ratios will be analyzed in a corporate distress prediction context using a multiple discriminant statistical methodology. Through this exercise, I will explore not only the quantifiable characteristics of potential bankrupts but also the utility of a much-maligned technique of financial analysis: ratio analysis. Although the models that we will discuss...
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...9 Ratio Analysis Introduction The analysis of the financial statements and interpretations of financial results of a particular period of operations with the help of 'ratio' is termed as "ratio analysis." Ratio analysis used to determine the financial soundness of a business concern. Alexander Wall designed a system of ratio analysis and presented it in useful form in the year 1909. Meaning and Definition The term 'ratio' refers to the mathematical relationship between any two inter-related variables. In other words, it establishes relationship between two items expressed in quantitative form. According J. Batty, Ratio can be defined as "the term accounting ratio is used to describe significant relationships which exist between figures shown in a balance sheet and profit and loss account in a budgetary control system or any other part of the accounting management." Ratio can be used in the form of (1) percentage (20%) (2) Quotient (say 10) and (3) Rates. In other words, it can be expressed as a to b; a: b (a is to b) or as a simple fraction, integer and decimal. A ratio is calculated by dividing one item or figure by another item or figure. Analysis or Interpretations of Ratios The analysis or interpretations in question may be of various types. The following approaches are usually found to exist: (a) Interpretation or Analysis of an Individual (or) Single ratio. (b) Interpretation or Analysis by referring to a group of ratios. (c) Interpretation or Analysis of ratios by trend...
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...lists available at SciVerse ScienceDirect Knowledge-Based Systems journal homepage: www.elsevier.com/locate/knosys Bankruptcy prediction models based on multinorm analysis: An alternative to accounting ratios Javier de Andrés ⇑, Manuel Landajo, Pedro Lorca University of Oviedo, Spain a r t i c l e i n f o a b s t r a c t In this paper we address the bankruptcy prediction problem and outline a procedure to improve the performance of standard classifiers. Our proposal replaces traditional indicators (accounting ratios) with the output of a so-called multinorm analysis. The deviations of each firm from a battery of industry norms (computed by nonparametric quantile regression) are used as input variables for the classifiers. The approach is applied to predict bankruptcy of firms, and tested on a representative data set of Spanish firms. Results indicate that the approach may provide significant improvements in predictive accuracy, both in linear and nonlinear classifiers. Ó 2011 Elsevier B.V. All rights reserved. Article history: Received 9 February 2011 Received in revised form 2 October 2011 Accepted 3 November 2011 Available online 30 December 2011 Keywords: Bankruptcy prediction Classification techniques Nonparametric methods Quantile regression Accounting ratios 1. Introduction Under the current economic conditions, bankruptcy early warning systems have become tools of key importance in order to guarantee the stability of the economy, as a consequence of their potential...
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...company typically accounts for only 10-20% of total inventory items. C-items are, on the contrary, items with the lowest consumption value. The lower 5% of the annual consumption value typically accounts for 50% of total inventory items. B-items are the interclass items, with a medium consumption value. Those 15-25% of annual consumption value typically accounts for 30% of total inventory items. 1 The annual consumption value is calculated with the formula: (Annual demand) x (item cost per unit). Through this categorization, the supply manager can identify inventory hot spots, and separate them from the rest of the items, especially those that are numerous but not that profitable. The following steps will explain to you the classification of items into A, B and C categories. 1. Find...
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...Multivariate Discriminant Analysis Priyanshi Gupta An Overview MDA is a statistical technique used to classify an observation into one of the several a priori groupings dependent on the observation’s individual characteristics. It is used primarily to classify and/or make predictions in the problems where dependent variable comes in qualitative form, for example, male or female, bankrupt or non-bankrupt etc. So the first step is to establish explicit group classifications. We have got observations coming from k groups. We are trying to look at what is the best way or best function in order to discriminate observations coming from different groups. Once such function is in place, we go to classification which basically is the problem of classification of a new observation into appropriate population using the discriminant function. So typically in such problems, once you have a set of data (called LEARNING set of data) with observations possibly coming from different populations are pre-classified, having predefined memberships to the groups. And based on the particular previously classified data, we create a discriminant function and can use it after proper calibration to classify a new observation to be coming from one of the groups. Discriminant analysis is used when groups are known a priori. Types of DA Problems 2 Group Problems... …regression can be used k-Group Problem (where k>=2)... …regression cannot be used if k>2 Example of a...
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...The Review of the Theoretical and Empirical Basis of Financial Ratio Analysis Revisited With the Modern Developments in the Web-Based Publishing Abstract This web-based publication is an addendum to a previous review of the research and research trends in financial ratio analysis. The first purpose is to add more current references to the previous review. The second purpose is to emphasize the changes facilitated by the modern World Wide Web based publication practices and their impact on the availability of scientific publications. The new references are listed only without detailed reviewing, since no drastic additions have come to the fore in the field. However, it is felt that the additions are sufficient to warrant this addendum made readily possible by the option of making this publication available online. Keywords: Financial statement analysis, financial ratios, review, electronic publishing Referencing: Salmi, Timo, Jussi Nikkinen & Petri Sahlström (2005). The Review of the Theoretical and Empirical Basis of Financial Ratio Analysis Revisited. University of Vaasa, Finland. URN:NBN:fi-fe20051937. Available from World Wide Web: <URL:http://www.uwasa.fi/~ts/wbfa/wbfa.htm>. Acknowledgements for useful discussions: Prof. Ilkka Virtanen and Library Managing Director Vuokko Palonen. Purpose Salmi and Martikainen (1994) presented a review of the theoretical and empirical basis of financial ratio analysis. In particular,...
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...Star Grading System Guide Star Grading System Guide Contents I. Star Grading Introduction 2 a) The Star Grading Committee II. Becoming Star Graded 2 a) Application for exemption from Star Grading Requirements III. Continuing to be Star Graded a) b) c) d) 3 Annual Rechecks Annual Rollover Lapse or Revocation of Star Grading Failed Initial Grading or Annual Recheck IV. Allegations of Non-Compliance 5 V. Appeals 5 VI. Star Grading Criteria 6 a) Mandatory Minimum Requirements b) Criteria for Star Grading Classifications Two star 7 Three star 9 Four star 12 Four plus star 15 Five star 18 c) Criteria for Cars and Limousines 21 VII. Appendix a) ADS Code of Conduct – requirements for buses and coaches b) Terms and Conditions of Star Graded Vehicles 22 22 23 https://busandcoach.sharepoint.com/Shared Documents/BCA STAR GRADING/Star Grading Docs/Star Grading System Guide - 2014.docx 1 Star Grading System Guide I. Star Grading Introduction Star Grading is open to all BCA members and is a great way to showcase the quality of vehicles. Star Grading makes it easier for customers to compare the standards of service offered by individual bus and coach operators, and allows tour operators and travelers to select products in advance with confidence. The Approved Destination Status (ADS) Code of Conduct requires that all buses and coaches used for ADS tours must be BCA Star Graded three stars or higher. The ADS system is based on a bilateral tourism arrangement between...
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...The bootstrap can also compare two populations, without the normality condition and without the restriction to comparison of means. The most important new idea is that bootstrap resampling must mimic the separate samples design that produced the original data. Bootstrap in mean, bootstrap in median, and bootstrap in confidence interval are three kinds of effective way to handle mass spectrometric data. Then,we need to reduce dimension based on bootstrap method. It may allow the data to be more easily visualized. Afterwards, using results obtained by bootstrap, we use data mining method to predict a patient has ovarian cancer or not. Decision tree induction and neural network are usual way to classify it. Keywords: Bootstrap, data mining, classification tree, decision tree induction, neural network, mass spectrometry data, ovarian cancer, control... iii Contents 1 Introduction 1.1 1.2 1.3 Mass Spectrometry . . . . . . . . . . . . . . . . . . . . . . Bootstrap Method . . . . . . . . . . . . . . . . . . . . . . Data Mining . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1...
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...were not aloud to sit around. The secular prison is where inmates can feel regret, a meeting for religious need for expressing contrition for sin, including a place of penitence or penance; expressing remorse and regret of their crimes. By doing this an inmate can say “I am sorry and promises not to do that again”. (Foster, 2006 pg. 22) Minimum security is setup for the “short-termers” (Foster, 2003 pg. 124) the inmates are approaching release and have worked themselves down have a higher classification. The prison is smaller with minimal perimeter security and less internal control with highest rates of inmates to guards. The wire fence is there for the safety of the public, but the inmates can still escape (foster, 2003, pg124) Medium security is either dormitory or pod housing with double fences instead of walls. The inmate to guard ratio is twice compared to the maximum security prison because inmates are not perceived as dangerous and 35% of the inmates are in this classification (Foster, 2003 pg. 123). Security in state prisons has five levels of security, minimum, medium, close high and...
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...vides relevant information useful not only in helping you should be able to: investors and creditors predict future cash flows Describe the purpose of the balance but also in the related assessments of liquidity sheet and understand its usefulness and limitations. and long-term solvency. Distinguish between current and noncurrent The purpose of this chapter is to provide assets and liabilities. Identify and describe the various balance sheet an overview of the balance sheet and asset classifications. notes to the financial statements and to Identify and describe the two balance sheet liability classifications. explore how this information is used by Explain the purpose of financial statement decision makers. disclosures. LO6 Explain the purpose of the management discussion and analysis disclosure. LO7 Explain the purpose of an audit and describe the content of the audit report. LO8 Identify and calculate the common liquidity and financing ratios used to assess risk. FINANCIAL REPORTING CASE What’s It Worth? “I can’t believe it. Why don’t you accountants prepare financial statements that are relevant?” Your friend Jerry is a finance major and is constantly badgering you about what he perceives to be a lack of relevance of financial statements prepared according to generally accepted accounting principles. “For example, take a look at this balance sheet for Leon’s Furniture Limited (www.leons.ca) that I just downloaded off the...
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...License No. POEA-223-LB-110411-R [pic] Room 300, No. 610 Gochangco Bldg., T.M. Kalaw Street, cor. M.Y. Orosa Street, Ermita Manila, 1000 Philippines t : +63 (2) 524 4745, 524 4750 536 4452, 302 7101 (loc. 201-205) f : +63 (2) 302 7036 e : applymsd@e-recruitment.com.ph w : www.lbsrecruitment.com.ph We do it better. APPLICATION FORM Position Applied Medical Assistant Nurse Control No. 2014-001-0037119 Your Desired Salary How did you know LBS Recruitment Solutions Corp.? online/ friends Do you have any pending application from other Agency / Company? no Personal Information | Dela Roca | Miriam | Montalbo |Date Applied | July 25, 2014 | |Last Name |First Name |Middle Name |Religion | Roman catholic | |Highest Education | College |Date of Birth| October 2, 1991 |Place of Birth | Batangas City | |No. of Experience Local | |Abroad | |Age | 22 | |Civil Status | Single |No. of Children | |Gender M / F |Weight (kg) | 59 |Height (cm) | 162.5 | |Name of Father...
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...Case Study: CRAZY EDDIE 1-6 1. Key Ratios: 1987, 1986, 1985, 1984 Liquidity Ratios: Current Ratio: 2.4062, 1.3985, 1.5626, 0.9287 Quick Ratio: 1.4044, 0.5982, 0.7680, 0.1499 Solvency Ratios: Debt to Assets Ratio 0.6837 0.6643 0.6359 0.8298 Times Interest Earned 3.6169 30.3927 28.2877 14.9253 Long-Term Debt to Equity 2.1617 1.9786 1.7462 4.8755 Activity Ratios: Accounts Receivable Turnover 32.5026, 116.7711 49.7515, 52.7208 Inventory Turnover Ratio: 4.98, 3.55, 1.89, 1.95 Looking at the key ratios during that period there were a lot of red flags. The audit risk for Crazy Eddie would be very high. Some of the major red flags were inventory turnover in 4 years went from 4.98 to 1.95. That shows that some of the accounting was incorrect. Some of the other red flags are the amount of accounts receivable. 2. a. Visit the actual store without telling them and check the inventory in place to compare with the false amounts on the inventory count sheets. b. Contact different vendors, creditors and supplies to verify they received payment from Crazy Eddie. Also confirm with the banks and creditors about the notes payable account then trace that information to the general ledger. c. Observe the recorded sales from authorized shipping and approve the customer orders and monthly statements to customers. You have to also make sure there is a separation of duties between handling the cash and reconciling the bank accounts. Therefore the same person is not doing both...
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