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FABM/FINANCE > ewan ko > Flashcards

ewan ko Flashcards

1
Q

Formula used in quick ratio

A

Current Asset - Inventory / current liabilities

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2
Q

What do we measure in net working capital ratio

A

how much liquid asset is available after deducting current liabilities

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3
Q

What happens if the current ratio is greater

A

the company has the ability to cover short term liabilities

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4
Q

what happens if the current ratio is less

A

the company hsd no ability to cover short term liabilities

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5
Q

It measures number of times per yeay of the companies ability to collect its accounts receivable

A

accounts receivable turnover

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6
Q

Formula for accounts receivable turnover

A

Net sales / Average Accounts receivable

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7
Q

Formula to get the average accounts receivable

A

Accounts receivable year 1 + Accounts receivable year 2 / 2

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8
Q

Where do we get the net sales from?

A

From Sci

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9
Q

It measures the average number of days, receivable are converted in cash

A

Days of sales outstanding

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10
Q

Formula for days of sales outstanding

A

Days in a year (365) / Account Receivable turnover

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11
Q

this indicates if the firm holds excessive levels of inventory that decrease the firms profitability

A

Inventory turnover

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12
Q

How do we measure in inventory turnover

A

Cost of sales/average inventory

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13
Q

This measure how much can be spent on the operating expenses to reach target profit

A

gross profit margin

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14
Q

under the profitability ratio’s are: (4)

A
  • gross profit margin
    -profit margin
    -return on total asset
    -return on equity
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15
Q

It is alternative referred as performance ratio

A

profitability ratio

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16
Q

It measures the ability of the firm to make profit

A

profitability ratio

17
Q

Formula for times interest earned ratio

A

EBIT / Interest Expense

18
Q

It indicates the margin of safety for payment of interest charges. also, it provides insight on a firms ability to payits debt obligation

A

times interest earned ratio

19
Q

Formula for debt to equity ratio

A

total liabilities (TL) / Owners equity (OE)

20
Q

It compares resources provide by creditors with resources given by the shareholders / the owners

A

debt to equity ratio

21
Q

Formula of Debt to asset ratio

A

Total Liabilities (TL) / Total Asset (TA)

22
Q

It measures the percentage provided by the creditors

A

debt to asset ratio

23
Q

The three topics under solvency/leverag

A

-debt to asset ratio
-debt to equity ratio
-times interest earned ratio

24
Q

“how many percent do we loan for our capital?”

A

solvency/ leverage

25
Q

It measures the size of debt in relation to the overall capital structure

A

leverage

26
Q

extensively using debt to satisfy long term debt

A

solvency

27
Q

formula to get the average total assets

A

TA YR2 +TA YR 1 / 2

28
Q

Formula for total asset turnover

A

Net Sales / Average total asset

29
Q

What does total assets turnover measures

A

it measures the company still have sales

30
Q

measures the ability of the firm to utilize its assets to generate sales

A

total asset turnover

31
Q

formula for operation cycle

A

days of sales outstanding + average age of inventory

32
Q

It measures the average number of days of inventories and accounts receivable that are converted into cash

A

operating cycle

33
Q

formula for the average age inventory

A

Number of days in a year (365) / inventory turnover

34
Q

it measures the average days of inventories converted to cash

A

the average age of inventory

35
Q

Formula to get the average inventory

A

inventory Year 2 + Inventory year 1 / 2

36
Q

formula to get the inventory turnover

A

Cost of sales / average inventory

37
Q

We measure how much liquid asset is available after deducting current liabilities

A

Ner working capital ratio

FABM/FINANCE (1 decks)

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