RATIOS

Question 1

5 RATIO CATEGORIES

Answer 1

1. PROFITABILITY RATIOS
2. LIQUIDITY RATIOS
3. SOLVENCY/ DEBT UTILIZATION RATIOS
4. ACTIVITY/ ASSET UTILIZATION RATIOS
5. MARKET RATIOS

Question 2

PROFITABILITY RATIOS

Answer 2

1. GROSS MARGIN OR GROSS PROFIT
2. OPERATNG PROFIT MARGIN
3. PROFIT MARGIN
4. RETURN ON ASSETS
5. RETURN ON EQUITY
6. RETURN ON SALES
7. DIVIDEND PAYOUT RATIO

Question 3

GROSS MARGIN OR GROSS PROFIT

Answer 3

GROSS PROFIT/ NET SALES

Question 4

OPERATING PROFIT MARGIN

Answer 4

OPERATING PROFIT/ NET SALES

Question 5

PROFIT MARGIN

Answer 5

NET INCOME AFTER INTEREST AND TAX/ NET SALES

Question 6

RETURN ON ASSETS

Answer 6

NET INCOME AFTER INTEREST AND TAX/ AVERAGE TOTAL ASSETS

Question 7

RETURN ON EQUITY

Answer 7

NET INCOME AFTER INTEREST AND TAX/ AVERAGE COMMON SHAREHOLDERS EQUITY

Question 8

RETURN ON SALES

Answer 8

INCOME BEFORE INTEREST INCOME, INTEREST EXPENSE, AND TAXES/ NET SALES

Question 9

DIVIDEND PAYOUT RATIO

Answer 9

CASH DIVIDEND PER COMMON SHARE/ BASIC EPS

Question 10

LIQUIDITY RATIOS

Answer 10

1. CURRENT RATIO
2. QUICK RATIO (ACID TEST)

Question 11

CURRENT RATIO

Answer 11

CURRENT ASSETS/ CURRENT LIABILITIES

Question 12

QUICK RATIO (ACID TEST)

Answer 12

CASH & CASH EQUIVALENTS + MARKETABLE SECURITIES + A/R NET / TOTAL CURRENT LIABILITIES

Question 13

SOLVENCY (DEBT UTILIZATION) RATIOS

Answer 13

1. DEBT TO TOTAL ASSETS
2. DEBT TO EQUITY
3. TIMES INTEREST EARNED
4. FREE CASH FLOW
5. OPERATING CASH FLOW

Question 14

DEBT TO TOTAL ASSETS

Answer 14

TOTAL LIABILITIES/ TOTAL ASSETS

Question 15

DEBT TO EQUITY

Answer 15

TOTAL LIABILITIES/ TOTAL EQUITY

Question 16

TIMES INTEREST EARNED

Answer 16

EBIT/ INTEREST EXPENSES

Question 17

FREE CASH FLOW

Answer 17

NOPAT+ DEPRECIATION-CAPITAL EXP- CHANGE IN WORKING CAPITAL

Question 18

OPERATING CASH FLOW

Answer 18

CASH FLOW FROM OPERATIONS/ ENDING CURRENT LIABILITIES