Ratio Analysis Equations Flashcards
Current Ratio
Current assets/current liabilities
Liquidity ratio
Quick Ratio (acid test ratio)
(Current assets - prepaid expenses - inventory)/current liabilities
Liquidity ratio
Receivables turnover
Credit sales/average accounts receivable
Asset turnover ratio
Number of times receivables is turned over in a year.
Average collection period
Average accounts receivable/(credit sales/365)
Or
365/receivables turnover
Asset turnover ratio
Inventory turnover
Cost of goods sold/average inventory
How many times inventory is sold in a year
Asset turnover ratio
Inventory period
Average inventory/(cost of goods sold/365)
Or
365/inventory turnover
Asset turnover ratio
Gross margin
(Sales - cost of goods sold)/sales
Profitability ratio
Profit margin
Net income/sales
Profitability ratio
Return on assets
Net income/average total assets
Profitability ratio
Return on equity
Net income/average equity
Profitability ratio
Debt ratio
Total liabilities/total assets
Solvency/debt service ratio
Debt-to-equity ratio
Total liabilities/equity
Solvency/debt service ratios
Debt service coverage
Net operating income/(principal + interest payments)
Solvency/debt service ratio
Times-interest-earned ratio
EBIT/interest expense
Solvency/debt service ratio
Asset turnover
Sales/average total assets
