Analysis

Question 1

Current Ratio

Answer 1

Current Assets ÷ Current Liabilities

Question 2

Current Ratio

Answer 2

Current Assets ÷ Current Liabilities

Question 3

Quick (Acid test) Ratio

Answer 3

(Cash & cash equivalents + Marketable Securitis + Net Receivables)
÷
Current Liabilities

Question 4

Cash Ratio

Answer 4

Cash flow from operations
÷
Current Liabilities

Question 5

Net working capital ratio

Answer 5

(Current Assets - Current Liabilities)
÷
Total Assets

Question 6

Accounts Receivable Turnover

Answer 6

Net Credit Sales
÷
Average Account Receivables

Question 7

Days Sales in Receivables

Answer 7

Days in Year
÷
Account Receivable Turnover Ratio

Question 8

Inventory Turnover

Answer 8

Cost of goods sold
÷
Average Inventory

Question 9

Days in Inventory

Answer 9

Days in Year
÷
Inventory Turnover Ratio

Question 10

Accounts Payable Turnover

Answer 10

Total Purchases
÷
Average Accounts Payable

Question 11

Debt Ratio
(Debt to Asset Ratio)

Answer 11

Total Liabilities
÷
Total Assets

Question 12

Debt to Equity Ration

Answer 12

Total Liabilities
÷
Total Shareholder’s Equity

Question 13

Debt to EBITDA Ratio

Answer 13

Total Liabilities
÷
EBITDA

Question 14

Interest Coverage
(Times interest earned)

Answer 14

Earnings before Interest and Tax (EBIT)
÷
Interest Expensed

Question 15

Financial Leverage Ratio

Answer 15

Total Assets
÷
Total Shareholder Equity

Question 16

Operating Leverage Ratio

Answer 16

Fixed Operating Cost
÷
Total Operating Cost

Question 17

Gross Profit Margin

Answer 17

Gross Profit
÷
Sales

Question 18

Operating Profit Margin

Answer 18

Operating Income
÷
Sales

Question 19

Net Income Margin

Answer 19

Net Income
÷
Sales

Question 20

Return on Investment

Answer 20

Operating Income (Measure of profit)
÷
Average Invested Capital (Measure of Capital)

Question 21

Return on Assets

Answer 21

Net Income
÷
Average Total Assets

Question 22

Return on Equity

Answer 22

Net Income
÷
Average Total Equity

Question 23

Return on Common Equity

Answer 23

Net Profit - Preferred dividends
÷
Average Common Equity

Question 24

Profit Margin

Answer 24

Net Income
÷
Net Sales

Question 25

DuPont Model ROA

Answer 25

Net Income ÷ Average Total Assets

Question 26

P/E per share

Answer 26

Market Price per share ÷ Earnings per share

Question 27

Basic EPS

Answer 27

Net Income - Preferred Dividends ÷ Weighted Average number of Common shares outstanding

Question 28

Dividend Payout Ratio

Answer 28

Dividends per share (Total Dividends) ÷ Earnings per share (Net Income)

Question 29

Dividend Yield Ratio

Answer 29

Dividend per share ÷ Market Price per share

Question 30

BV per Common Share

Answer 30

Total Equity- Liquidation value of Preferred Stock ÷ Common Stock Outstanding

Question 31

Residual Income

Answer 31

Operating Income- Target Return on Investment Capital

Question 32

Target Return on Investment Capital

Answer 32

Average Invested Capital × Implied Interest Rate (Weighted Average Cost of Capital)

Question 33

Residual Income (Complete)

Answer 33

Operating Income - (Average Invested Capital x Implied interest rate)

Question 34

Cost of Goods (Perpetual System)

Answer 34

Begin Inventory + Purchases + Freight cost - End Inventory = Cost of Goods Sold

Question 35

Cost of Goods (Periodic System)

Answer 35

Begin Material Inventory + Purchases - End Material Inventory = Direct Material used in production Direct Material Cost + Direct labor + Manufacturing Overheads (Fix & VAR) = Total Manufacturing Cost Total Manufacturing Cost + Begin WIP - End WIP = Cost of goods manufactured Cost of goods manufactured + Begin Finished Goods - End Finished Goods = Cost of goods sold

Question 36

Weighted Average Cost per unit (WACPU)

Answer 36

Cost of Inventory (Begin) + Purchases ÷ Units (Begin) + purchased = WACPU

Question 37

If foreign exchange Appreciates, result in functional currency AP (Purchaser)

Answer 37

Transaction Loss (AP $ is now more in purchaser book)

Question 38

If foreign exchange Appreciates, result in functional currency AR (Sale)

Answer 38

Transaction gain (AR $ now more on seller books)

Question 39

If foreign exchange Depreciate, result in functional currency AP (Purchase)

Answer 39

Transaction gain (AP in $ is now less in purchaser book)

Question 40

If foreign exchange Depreciate, result in functional currency AP (Sale)

Answer 40

Transaction loss (AR in $ is less more in seller book)