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Finanacial Decision Making > Ratios > Flashcards

Ratios Flashcards

0
Q

Current Ratio

A

CA / CL

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1
Q

Working capital formula?

A

CA - CL

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2
Q

Quick Ratio

A

(Cash+ Mktble + A/R) / CL

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3
Q

Quick Ratio 2

A

(CA - Inv - Prepaid Exp) / CL

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4
Q

Cash Ratio

A

(Cash + Mktble) / CL

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5
Q

Cash Flow Ratio?

A

Operating Cash Flow / CL

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6
Q

What are liquidity ratios?

A

Current Ratio
Quick Ratio
Cash Ratio
Cash Flow Ratio

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7
Q

What are Activity ratios?

A

Receivables Turnover

Inventory Turnover

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8
Q

Receivables turnover ratio?

A

Net Credit Sales / Average Net Receivables

{ net = deduct any Allowances for Uncollectibles }

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9
Q

Inventory Turn over ratio?

A

COGS / Average Inventory

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10
Q

Total Asset Turnover Ratio?

A

Sales / Average Total Assets

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11
Q

Fixed Asset Turnover Ratio?

A

Sales / Average Net PP&E

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12
Q

What are Solvency Ratios?

A

Debt to Equity ratios
Times Interest Earned
Debt to Asset ratio

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13
Q

Cash Conversion Cycle (CCC) formula?

A

CCC= ICP + RCP - PDP

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14
Q

ICP?

A

Avg Inventory / COGS per Day
Or
360 ( or 365 ) / Inv turnover ratio

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15
Q

Average Inventory calculation?

A

( Beg Inv + Ending Inv ) / 2

16
Q

RCP ( Receivable Collection Period) = ?

A

RCP = Avg Receivables / credit sales per day

Or

360 ( or 365 ) / Receivables Turnover Ratio

17
Q

PDP ( A/P Deferal Period ) ?

A

PDP = Avg Payables / Credit Purchases per Day

Or

365 ( or 360) / Payables Turnover Ratio

18
Q

If the ratio is >1, then a increase in Num and Denom will…?

A

Decrease the ratio

19
Q

Operating leverage means?

A

Existence of fixed Opex

20
Q

Financial leverage means?

A

Raising capital through debt than equity.

21
Q

Financial leverage ratio formula?

A

Financial Levearge = Assets / Equity

Assets = Liab + Equity

22
Q

In Financial leverage ratio, a ratio > 2 implies?

A

Liabilities > equity

23
Q

If Leverage < 2 indicates?

A

Liability < Equity

24
Q

Debt To Total Asset ratio?

A

Total Debt / Total Assets

25
Q

Debt to Equity ratio?

A

Total Debt / Total Equity

26
Q

Debt to Total Capital ratio ?

A

(CL + LTL) / Total Debt + Total Equity

27
Q

Long term Debt to equity?

A

Total Debt - CL / Equity

28
Q

Times Int Earned?

A

EBIT / Interest Expenses

29
Q

Fixed charge Coverage ratio?

A

(EB fixed charges and taxes) / Fixed charges

30
Q

Cash flow to Fixed charge

A

(Cash flow from Op + Fixed charge + tax payment) / fixed charges

31
Q

If Operating Leverage is high, greater the effects changes in Sales Revenue have on ….?

A

Operating Income

32
Q

Higher Debt-Equity ratio means, higher chance of …..?

A

Bankruptcy

33
Q

Lower debt-equity ratio means, company is less reliant on…?

A

Debt

34
Q

Lower Debt to Total Assets ratio indicates ?

A

Co has enough assets to cover long-term obligations

Finanacial Decision Making (2 decks)

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