Ratios

Question 1

What is the formula for

Gross margin

Answer 1

Gross Profit1/Sales1

how much profit a company makes as a

Question 2

Net margin

Answer 2

Net income1/Sales1

Question 3

Operating Margin

Answer 3

Operating profit1/Sales1

Question 4

Profit (EBIT) Margin

Answer 4

EBIT1/Sales1

Question 5

ROE

Answer 5

Net Income1/Total Equity0

how much profit each dollar of common
stockholders’ equity generates benchmark: industry-specific

Question 6

Return on assets (ROA)

Answer 6

EBIT1/Total Assets0

Question 7

Return on capital employed (ROCE)

Answer 7

EBIT1/Capital Employed0

Question 8

Capital Employed

Answer 8

Equity + Dib

Question 9

Return on operating net assets (RONA)

Answer 9

Operating Profit1/Operating Net Assets0

Question 10

Operating Net Assets

Answer 10

Capital Employed - Financial Assets

Question 11

Financial Assets

Answer 11

Cash and cash equivalents + Marketable securities

Question 12

Receivables turnover

Answer 12

Sales1/Average Receivables

Question 13

Inventory Turnover

Answer 13

COGS1/Average Inventory

Question 14

Payables turnover

Answer 14

Pruchases1/Average Trade Payables

Question 15

Purchases

Answer 15

Closing Inventory - Opening Inventory +COGS

Question 16

Asset Turnover (TOA)

Answer 16

Sales1/Average Total Assets

Question 17

Working Capital turnover

Answer 17

Sales1/Avergae Working Capital

Question 18

Working Capital

Answer 18

Current Assets - Current Liabilities

Question 19

Equity Ratio (Financial Leverage)

Answer 19

Total Equity1/ Total Assets1

how much of the total company assets
are financed by owners’ investments benchmark: > 20%

Question 20

Debt ratio (Financial Leverage)

Answer 20

Total Liabilties1/Total Assets1

how many assets the company must sell in order to pay off all of its liabilities benchmark: <80%

Question 21

Debt-to-equity ratio (financial Leverage)

Answer 21

Total Liabilites1 / Total Equity1

Question 22

Equity Multiplier (Financial Leverage)

Answer 22

Total Assets1 / Total Equity1

how many times assets are higher than stockholders’ equity benchmark: <5

Question 23

Interest Coverage

Answer 23

EBIT1 / Interest Expense1

how many times a company can pay its
interest expenses using EBIT
benchmark:> 5, while ab < 5 cdefg

Question 24

Current Ratio

Answer 24

Current Assets1 / Current Liabilities1

how many times/whether a firm is able to pay off its short-term liabilities with its current assets
benchmark:> 2

Question 25

Quick Ratio (Acid test)

Answer 25

(Current Assets1-Inventory1) / Current Liabilities1 ## Footnote how well a company can quickly convert its assets into cash in order to pay off its current liabilities benchmark:> 1

Question 26

Cash availability

Answer 26

Cash and cash equivalents1+Marketable Securities1/Current Liabilities1

Question 27

Cash conversion cycle (CCC)

Answer 27

Inventory days + Debtor Days - Creditor Days

Question 28

Inventory Days

Answer 28

Average inventory/COGS*365

Question 29

Debtor Days

Answer 29

Average Receivables/Sales*365

Question 30

Creditor Days

Answer 30

Average Payables/Purchases * 365

Question 31

Purchases

Answer 31

Closing Inventory - Opening Inventory + COGS

Question 32

Payout Ratio

Answer 32

Dividends/Net Income or Dividend per share/earnings per share

Question 33

Dividend yield

Answer 33

Dividend per share/market price of a share

Question 34

Price Earnings ratio

Answer 34

Market Capitalization/Net income or market price of a share/earnings per share

Question 35

ROE

Answer 35

Net Income1/Total Equity0 or Net Income1/Pretax Profit1 * Pretax Profit1 / EBIT1 * EBIT1/Sales1 * Sales1/Total Assets0 * Total Assets0/Total Equity0

Question 36

ROA

Answer 36

EBIT1/Total Assets0

Question 37

ROCE

Answer 37

EBIT1/Capital Employed0

Question 38

ROE with ROA instrument

Answer 38

(1-t)[ROA+(ROA-COD)*D0/E0]

Question 39

ROE with instrument ROCE

Answer 39

(1-t) [ ROCE + (ROCE - Rd)*Dib0/E0]

Question 40

Rd

Answer 40

Interest Expense1/Dib0

Question 41

ROE with instrument RONA

Answer 41

(1-t) [RONA + (RONA - Rnd) * ND0/E0)

Question 42

Rnd

Answer 42

(Interest Expense1 - Financial Income1)/ Net debt0

Question 43

Net debt

Answer 43

Dib - Financial Assets

Question 44

COD

Answer 44

Interest Expense1/Total Liabilities

Question 45

Sustainable Growth Rate

Answer 45

*ROE(1-p)*

Question 46

Internal Growth Rate

Answer 46

ROA(1-p)