How well are you collecting your bills? You're a sweater retailer, LambHair 'R' Us, and you sell everything on a Net 30 basis. That is, you sell a sweater in your store, and then 100% of the people who buy from you, get a bill on paper, old school, in the snail mail, and they pay you 30 days later.
So what then is your receivables turnover ratio? Well, you collect your bills to the tune of $3 million this year. That is, you had $3 million in legal fees that came to your law firm this year. At any one time, you had assets of $300,000 in receivables out there, i.e. that much dough billed to your now-totally-innocent-not-at-all-guilty-of-dealing-meth clients. So your RTR then is 10:1. That is, you have only a tenth of your total revenues "at risk" at any given time relative to everything else.
Low risk for a drug-defending law firm, all things considered.
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finance a la shmoop. what does per-capita mean? well there's poor capita yeah this
guy, how would you like to be named capita and then there's per capita which [man sits under a tree]
just means well technically per head. yep comes from Latin like oh so many
things salsa dressing and dancing among others, the word decapitation comes to [dancing feet]
mind. like what happens when those flying human taxi drones get too far to the
left or when King Henry got tired of a wife. so if that happened often it had [helicopter prop]
throw off the per capita calculations. and same deal if we suddenly had a lot
of two-headed people being born like the aliens in men in black and whole bunch
other Hollywood movies. per capita is a useful metric in a bunch of financial
calculations. a common set is GDP or gross domestic product per capita .like
if you have a ton of GDP say ten trillion dollars from your country [100 dollar bill]
whateverstan, if you only have a million people that's a ton of production
productivity. but if you're say China with well over a billion people well
then it's a much lower GDP per capita. the calculations get quoted when talking
about things like cell phone monthly subscriptions, computer ownership or [people crowd around a cell phone]
particularly rollicking house parties. so yeah the notion of per capita is pretty
important but don't stress if you're not an expert yet. it's a nothing to lose
your head over. [man carries head]
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