Scribd Logo
Upload

Welcome to Scribd!

  • 12 views

    Illustration of "Saw-Tooth" Pattern When Using Activity Ratios To Forecast Balance Sheet Items

    Uploaded by

    Vaibhav Khokhar
    This document illustrates how using activity ratios to forecast balance sheet items can result in a "saw-tooth" pattern. It shows two panels with years 0-5 that include sales, total asset turnover ratio, average total assets, and ending total assets. Panel A uses a consistent sales amount and turnover ratio, resulting in ending total assets that alternate between 40 and 60. Panel B increases sales each year by 20% while keeping the turnover ratio the same, producing a saw-tooth pattern in ending total assets.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    Illustration of "Saw-Tooth" Pattern When Using Activity Ratios To Forecast Balance Sheet Items

    Uploaded by

    Vaibhav Khokhar
    12 views1 page
    This document illustrates how using activity ratios to forecast balance sheet items can result in a "saw-tooth" pattern. It shows two panels with years 0-5 that include sales, total asset turnover ratio, average total assets, and ending total assets. Panel A uses a consistent sales amount and turnover ratio, resulting in ending total assets that alternate between 40 and 60. Panel B increases sales each year by 20% while keeping the turnover ratio the same, producing a saw-tooth pattern in ending total assets.

    Original Description:

    Original Title

    Sawtooth-Example.xlsx

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This document illustrates how using activity ratios to forecast balance sheet items can result in a "saw-tooth" pattern. It shows two panels with years 0-5 that include sales, total asset turnover ratio, average total assets, and ending total assets. Panel A uses a consistent sales amount and turnover ratio, resulting in ending total assets that alternate between 40 and 60. Panel B increases sales each year by 20% while keeping the turnover ratio the same, producing a saw-tooth pattern in ending total assets.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    12 views1 page

    Illustration of "Saw-Tooth" Pattern When Using Activity Ratios To Forecast Balance Sheet Items

    Uploaded by

    Vaibhav Khokhar
    This document illustrates how using activity ratios to forecast balance sheet items can result in a "saw-tooth" pattern. It shows two panels with years 0-5 that include sales, total asset turnover ratio, average total assets, and ending total assets. Panel A uses a consistent sales amount and turnover ratio, resulting in ending total assets that alternate between 40 and 60. Panel B increases sales each year by 20% while keeping the turnover ratio the same, producing a saw-tooth pattern in ending total assets.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 1

    Illustration of "saw-tooth" pattern when using

    activity ratios to forecast balance sheet items

    Panel A
    Avg Total Ending Total
    Year Sales TATR Assets Assets
    0 100 40
    1 100 2.0 50 60 TATR = Sales / Avg Total Assets
    2 100 2.0 50 40 Ending Total Assets = 2*Avg Total Assets - Previous To
    3 100 2.0 50 60
    4 100 2.0 50 40
    5 100 2.0 50 60

    Panel B
    Avg Total Ending Total
    Year Sales TATR Assets Assets
    0 100 40
    1 120 2.0 60 80
    2 144 2.0 72 64
    3 173 2.0 86 109
    4 207 2.0 104 99
    5 249 2.0 124 150

    You might also like