… and I don’t have my books. Could someone please check my work on something? I’m trying to calculate the accruals ratio: NI = 201 CFO = 334 CFI = -21 Year 1 Total assets = 2,276 Cash and marketable securities = 1,285 Total liabilities = 1,237 Total debt = 0 Year 0 Total assets = 2,434 Cash and marketable securities = 1,382 Total liabilities = 1,170 Total debt = 0 So for average NOA, I get: {[(2,276 - 1,285) - (1,237 - 0)] + [(2,434 - 1,382) - (1,170 - 0)]} / 2 = -182 Then, Accruals Ratio = 201 - 334 - (21) = -112 / -182 = 0.62 Am I doing this correctly?
looks right to me but then again i havent passed level II…
Looks right to me… but i think my brain hemorrhaged a little bit trying to remember this stuff.
If you’re doing CF accruals this is correct.
How should I interpret the negative NOA? Does it render the ratio less meaningful? I’m running these over different companies in an industry and I’m getting average accrual ratios ranging from -31% to 5% – is lower better even when negative?
Hmm interesting… B/S Aggregate Accruals is measuring the diff between NOA from one year to the next. Higher is worse. So since NOAt is less negative than NOAt-1, it the same as saying NOA went up (even though its still negative)… So maybe you should look more towards just Aggregate Accruals rather than the ratio. Because if what I was just saying is right, you’d have inconsistent “which is better” for positive vs. negative ratios. I’m not sure if that makes sense, but its the best i got for you almost 2 months after the test haha.
Good call – I’ll go with aggregate accruals over total assets. Sound reasonable?
cjones65 Wrote: ------------------------------------------------------- > … and I don’t have my books. Could someone > please check my work on something? I’m trying to > calculate the accruals ratio: > > NI = 201 > CFO = 334 > CFI = -21 > > Year 1 > > Total assets = 2,276 > Cash and marketable securities = 1,285 > Total liabilities = 1,237 > Total debt = 0 > > Year 0 > > Total assets = 2,434 > Cash and marketable securities = 1,382 > Total liabilities = 1,170 > Total debt = 0 > > So for average NOA, I get: > > {[(2,276 - 1,285) - (1,237 - 0)] + [(2,434 - > 1,382) - (1,170 - 0)]} / 2 > > = -182 > > Then, Accruals Ratio = 201 - 334 - (21) = -112 / > -182 = 0.62 > > Am I doing this correctly? If I remember correctly, NOA = (Tot. Ass. - Cash&Invest) - (Tot. Liab. - total Debt). So ya it looks correct.
Thanks for posting this…it reminds me how much I love my job…and how much I would hate yours. I cringed at the thought of doing that all day long. This isn’t a jab at your position…it’s more a statement on how much I loathe accounting and FSA…I simply could not do that.
can we stop these calculations already ??? unless you are looking at L2 2010