Financial Ratios Flashcards
Working Capital
Current Assets - Current Liabilities
Current Ratio
Current Assets / Current Liabilities
Quick or Acid-Test Ratio
Cash, marketable securities, and receivables(net) / Current Liabilities
Current Cash Debt Coverage Ratio
Net Cash Provided by Operating Activities / Average Current Liabilities
Receivables Turnover
Net Credit Sales / Average Trade Receivables (Net)
Inventory Turnover
Cost of Goods Sold / Average Inventory
Asset Turnover
Net Sales / Average Total Assets
Number of Days’ Supply in Average Inventory
= 360 / Inventory Turnover OR = Average (ending) inventory / Average Daily Cost of Goods Sold
Number of Days’ Sales in Average Receivables
= 360 / Receivables Turnover
Profit Margin on Sales (Gross Margin)
Net Income / Net Sales
Rate of Return on Assets
Net Income / Average Total Assets
Rate of Return on Common Stock Equity ( Return on Equity)
Net income - Preferred dividends / Average Common Stockholder’s Equity
Earnings Per Share
Net Income - Preferred Dividends / Weighted Shares Outstanding
Price-Earnings Ratio
Market Price of Stock / Earnings Per Share
Payout Ratio
Cash Dividends / Net Income
