Financial Ratios II

Question 1

What is the preferred EPS (basic or diluted) when calculating P/E ratio?

Answer 1

Diluted

Question 2

What is days sales in A/R or average collection period measure?

Answer 2

Number of days required to collect receivables

Question 3

Fixed asset turnover (ratio)

Answer 3

Sales / Plant Assets

Question 4

Asset Turnover

Answer 4

Sales / Total Assets

Question 5

Difference between price to book and price to sales?

Answer 5

Price to book focuses on the balance sheet

Question 6

ROE (additional computation)?

Answer 6

ROE = Profit Margin x Asset Turnover x Equity Multiplier (or Leverage)

Question 7

Equity Multiplier?

Answer 7

Equity Multiplier = Average Assets / Average Stockholders’ Equity

Question 8

Dividedn Yield?

Answer 8

Dividends per Share / Market Price per Share

Question 9

What are the three levels interdependence in integrated planning?

Answer 9

1. Pooled
2. Sequential
3. Recipricol

Question 10

Book value per share?

Answer 10

Common Equity - Preferred Equity / Common Shares Outstanding

Question 11

What is sensitivity analysis?

Answer 11

Analysis that determines how results will change if the original data or underlying assumptions change

Question 12

What is Probablility (risk) analysis?

Answer 12

Analysis that combines the likelihood of various outcomes of sensitivity analysis

Question 13

What is the best measure of risk for a company?

Answer 13

Solvency

Question 14

Earnings yield?

Answer 14

Earnings per share / Market Price per Share