Flashcards in Financial Analysis Techniques Deck (13)
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1
Q
What do activity ratios indicate?
A
How well a firm uses its assets.
2
Q
What are seven examples of activity ratios?
A
- Receivables turnover,
- days of sales outstanding,
- inventory turnover,
- days of inventory on hand,
- payables turnover,
- payables payment period, and
- turnover ratios for total assets, fixed assets, and working capital.
3
Q
What do liquidity ratios indicate?
A
A firm’s ability to meet its short-term obligations.
4
Q
What are five examples of liquidity ratios?
A
- Current ratio
- quick ratio
- cash ratios
- defensive interval ratio
- cash conversion cycle.
5
Q
what do solvency ratios measure?
A
A firm’s ability to meet its long-term obligations.
6
Q
What are six examples of solvency ratios?
A
- debt-to-equity,
- debt-to-capital,
- debt-to-assets,
- financial leverage,
- interest coverage, and
- fixed charge coverage ratios.
7
Q
What do profitability ratios measure?
A
How well a firm generates operating income and net income.
8
Q
What are seven profitability ratios?
A
- Net, gross, and operating profit margins,
- pretax margin,
- return on assets,
- operating return on assets,
- return on total capital,
- return on total equity, and
- return on common equity.
9
Q
What do valuation ratio meaure?
A
The relative values of stocks.
10
Q
What are five examples of valuation ratios?
A
- earnings per share
- price-to-earnings,
- price-to-sales,
- price-to-book value, and
- price-to-cash-flow ratios.
11
Q
What is the basic DuPont equation?
A
ROE=
12
Q
What is the extended DuPont equation?
A
ROE=
13
Q
A