Financial Ratios

Question 1

NOWC

Answer 1

Current assets-Current liabilities

Question 2

Current Ratio

Answer 2

Currents Assets / Current Liabilities

Question 3

Acid Test Ratio

Answer 3

Current Assets -Stock/ Current Liabilities

Question 4

Inventories Turnover

Answer 4

Cost of Goods Sold / Average Inventory

Question 5

AV Settlement Period for Receivables

Answer 5

Trade Receivables / (Credit Sales/365)

Question 6

AV Settlement Period for Payables

Answer 6

Trade Payables / (Credit Purchases/365)

Question 7

Gross Profit Margin

Answer 7

Sales-Cost of Goods Sold / Sales x 100/1

Question 8

Operating Profit Margin

Answer 8

Operating Profit / Sales x 100/1

Question 9

Net Profit Margin

Answer 9

Net Profit / Sales x 100/1

Question 10

Return on Total Assets / Investments (ROA/ROI)

Answer 10

Net Profit / Total Assets x 100/1

Question 11

Return on Equity (ROE)

Answer 11

Net Profit / Shareholders’ Equity

Question 12

Debt Ratio

Answer 12

Total Liabilities / Total Assets

Question 13

Times Interest Earned Ratio / Interest Coverage Ratio

Answer 13

EBIT / Interest

Question 14

Fixed Assets Turnover

Answer 14

Sales / Net Fixed Assets

Question 15

Total Assets Turnover

Answer 15

Sales / Total Assets

Question 16

Price / Earnings (P/E)

Answer 16

Market Price per Share / Earnings per Share

Question 17

Market / Book (M / B)

Answer 17

Market Price per Share / Book Price per Share