What is Net Operating Assets

I don’t feel like digging through the books. Thanks.

me neither

Net Operating Assets = (Total Assets - Cash) - (Total Liabilities - Total Debt)

(assets - cash) - (liabs - debt) Note that the denom in the accrual ratios is avg NOA.


Don’t forget accruals for I/S: NI- (CFO-CFI) and divide by {NOA(t)+NOA(T-t)}/2 for ratio

zizou it is NI - CFO - CFI not the way you have written it. and remember to include the proper sign for the CFI. Book has it as NI - (CFO+CFI) and the two formulae that I have written are consistent, while the one you have is not.

Thanks for the catch, CP. It was a typo.

Yeah, you definitely don’t want to mess that up. You know +/- sign swapping is a rich source of distracting (and wrong) answer possibilities.

So an increase in CFI would be subtracted? Same with CFO? Can someone please confirm. Thanks.

CFI and CFO are subtracted from NI to find accruals for I/S. It’s a simple subtraction method. Let me recap since I f’d this up. T=whatever the time is and T-t=previous period For accruals on B/S: NOA= (Total Assets-cash) - (Total Liabilities- Total Debt) To find the accruals ratio: NOA(T)-NOA(T-t)/{NOA(T) + NOA(T-t)}/2 For accruals on I/S: NI-(CFO+CFI) Accruals ratio is NI-(CFO+CFI)/{NOA(T) + NOA(T-t)}/2 You want these ratios to be as low as possible. Low ratios mean that you have less accrual based accounting—>better quality of earnings. If I f’d this up, then I quit this thread and CP can set y’all straight.

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There is no increase in CFO or CFI Current period Net Income - Current Period CFO - Current Period CFI = Cash Flow based Accruals. Denominator is Average NOA. NI could have a lot of accruals - because of management manipulation. Since CFO and CFI are comparing balance sheets of two periods - those accrual components have been removed when you include those. You are left with the Cash earnings component.

Do you meant that you are left with the non-cash earnings component? Correct me if I’m wrong, but it looks like you’ve taken all the cash out of NI. At least that’s the way I think of it.

you are left with the “true” cash portion. when you do your CFO calc. your calculation included the change in AR, change in Inventory etc. right - where there could have been manipulations.(I shouldn’t say manipulations, but accruals).

I think you forgot cash equivalents and marketable securites: Isn’t NOA=(Total Assets - cash - cash equivalents - marketable securites) - (Total Liabilities - total debt)?

geezus i probably spent 20 minutes on the NOA BS question, did like 30 different calc’s and still couldn’t come up with any of the choices presented.

I get all the number correct, but forgot average, I HATE myself…cry :frowning: swellsrf Wrote: ------------------------------------------------------- > Net Operating Assets = (Total Assets - Cash) - > (Total Liabilities - Total Debt)

so the accruals were $1666 - i could not get the BS accrual ration right so marked C which was 11.xx%

I also got it as 1666 hope it is correct…

i think C was right 11.xx%. they gave you Bs accruals for the company and average NOA right in the financial statements… Hope it was a simple plug in the formula question Accruals ratio = accruals/Ave NOA