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The Internal Assessment

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The Internal Assessment focuses on identifying and evaluating a firm’s strengths and weaknesses in the functional areas of business, including: management, marketing, finance, production, research and development, computer information systems.
There are many subareas inside these functions, such as customer service, warranties, advertising, packaging, and pricing under marketing.
The functional business areas differ for different types of organizations, such as hospitals, universities, government agencies and so on. In a hospital, for example, functional areas may include cardiology, hematology, nursing, maintenance, physician support…
Functional areas of university can include athletic programs, placement services, housing, academic …show more content…

c) cash ratio = cash / short-term liabilities
What is measured: How many Euros of cash cover 1 EUR of short-term liabilities.
2) Leverage ratios
a) debt to total assets ratio = total debt / total assets
What is measured: How many percents of total funds (capital) are provided by creditors
b) debt to equity ratio = total debt / equity equity = total liabilities – liabilities
What is measured: The percentage of total funds provided by creditors versus by owners
c) times interest earned ratio = profit before interest and taxes / total interest from credit
What is measured: How many Euros of profit cover 1 Euro total interest
3) Activity ratios
a) inventory (stock) turnover = sales (return) / inventory (stock)
What is measured: How many times are inventories changed into other forms of current assets? The bigger number is better than smaller number.
Whether a firm holds excessive stocks of inventories and whether a firm is selling its inventories slowly compared to the industry average.
b) current assets turnover = sales (return) / current assets
What is measured: How many times are cash changed into cash again.
Cycle of current assets:
Cash –> material (wood, glass…) –> finished products –> claims (receivables) –> –>cash
c) The length of time of current assets turnover = 365 / current assets turnover
What is measured: how many days takes cycle of current assets.
The smaller number is better

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