Financial Statement Ratios Flashcards Preview

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Flashcards in Financial Statement Ratios Deck (19):
1

Working Capital

Current assets - Current liabilities

measure solvency

2

Current Ratio

Current assets / Current liabilities

short term debt paying ability

3

Quick ratio/acid test

CMR(rec.net) / Current liabilities

immediate short term liquidity

4

Current cash debt coverage ratio

Net cash provided by operating activities /
Average current liabilities

ability to pay off current liabilities in a given year from its operations

5

Receivables turnover

Net CREDIT sales / Average trade receivables(net)

liquidity of receivables

6

Inventory turnover

Cost of goods sold / Average inventory

liquidity of inventory

7

Asset turnover

Net sales / Average total assets

measures how efficiently assets are used to generate sales

8

# of day's supply in average inventory

360 / inventory turnover

OR

Average ending inventory / Average daily COGS

measures # of days required to sell inventory

9

Profit margin on sales (gross margin)

Net income / Net sales

measures net income generated by each dollar of sale

10

Rate of return on assets

Net income / Average total assets

measures over all profitability of assets

11

Rate of return on common stock equity (ret on equity)

Net income - Preferred dividends / Average common stockholder's equity

measures profitability of owner's investment

12

Earnings per share

Net income - Preferred dividends / weighted shares of CS outstanding

measures net income on each share of common stock

13

Price earnings ratio

Market price of stock / earnings per share

measures the ratio of market price per share to earnings per share

14

Payout ratio

Cash dividends / Net income

measures percentage of earnings distributed in the form of dividends

15

Debt to Equity

total debt / stockholder's equity

shows creditors the company's ability to sustain losses

16

Debt to total assets

total debt / total assets

measures the % of total assets provided by creditors

17

Times interest earned

Income b4 interest expense and taxes / interest expense

measures ability to meet interest payments as they come due

18

Cash debt coverage ratio

net cash provided by operating activities / average total liabilities

measures a company's ability to repay its total liabilities in a given year from its operations

19

Book value per share

common stockholder's equity / outstanding shares

measures the amount each share would receive if the company were liquidated at the amounts reported on the balance sheet