FAR-F2-M7-Ratio Analysis

Question 1

What is the working capital formula?

Answer 1

Working capital = current assets - current liabilities

Question 2

What is the current ratio formula?

Answer 2

Current ratio = (current assets / current liabilities)

Question 3

What is the quick ratio formula?

Answer 3

Quick ratio = (cash and cash equivalents + short term marketable securities + Net AR) / Current liabilities

Question 4

What is the AR turnover formula?

Answer 4

AR Turnover rate = Net Sales / Average net AR

Question 5

What is the Inventory Turnover formula?

Answer 5

Inventory turnover = COGS / Average Inventory

Question 6

What is the Days Sales in AR formula?

Answer 6

Days Sales in AR = (Net Ending AR) / (net sales / 365)

Question 7

What is the Days in Inventory Formula?

Answer 7

Days in Inventory = (Ending Inventory) / (COGS / 365)

Question 8

What is the AP Turnover Formula?

Answer 8

AP Turnover = COGS / Average Accounts Payable

Question 9

What is Days Payable Outstanding Formula?

Answer 9

Days Payable outstanding = (Ending AP) / (COGS/365)

Question 10

What is cash conversion cycle formula?

Answer 10

Cash conversion cycle = Days sales in AR + Days in Inventory - Days of Payables Oustanding

Question 11

What is the asset turnover formula?

Answer 11

Asset turnover = Net Sales / Average Total Assets

Question 12

What is the working capital turnover formula?

Answer 12

working capital turnover = net sales / average working capital

Question 13

What is net profit margin formula?

Answer 13

Net profit margin = Net Income / Net Sales

Question 14

What is return of assets formula?

Answer 14

Return of Assets = Net Income / Average Total assets

Question 15

What is Dupont Return on Assets Formula?

Answer 15

Dupont ROA = Profit Margin * Asset Turnover

Question 16

What is return on equity formula?

Answer 16

Return on Equity = Net Income / Average total equity

Question 17

What is return on sales formula?

Answer 17

Return on Sales = (Income before interest income, interest expense and taxes) / Net Sales

Question 18

What is the gross profit margin formula?

Answer 18

Gross profit margin = (Net sales - COGS) / Net Sales

Question 19

What is the operating cash flow ratio?

Answer 19

Operating cash flow ratio = Cash flow from operations / current liabilities

Question 20

What is debt to equity formula?

Answer 20

Debt to equity ratio = total liabilities / total equity

Question 21

What is the total debt ratio formula?

Answer 21

Total debt ratio = total liabilities / total assets

Question 22

What is the equity multiplier formula?

Answer 22

Equity multiplier = total assets / total equity

Question 23

What is the times interest earned formula?

Answer 23

Times interest earned = earnings before interest and taxes / interest expense

Question 24

What is the earnings per share formula?

Answer 24

EPS = (Net income - preferred dividends) / weighted average number of common shares outstanding

Question 25

What is the price earnings ratio formula?

Answer 25

Price earnings ratio = price per share / basic earnings per share

Question 26

What is the dividend payout ratio formula?

Answer 26

Dividend payout ratio = cash dividends / net income
Cash dividends = dividends per share * shares outstanding