Ratios Flashcards
(24 cards)
Current Ratio
Current Assets
(Cash + AR + Inventory) / Current Liabilities
Does the Acid Test include Pre-Paid?
No
Average Collection Period
360/Accounts Receivable Turnover
Accounts Receivable Turnover
Net Credit Sales / Average Net Accounts Receivable
Average Net Accounts Receivable
(Beginning A/R + Ending AR)/2
Quick Ratio
Cash + AR + Marketable Securities / Current Liabilities
Working Capital
Current Assets - Current Liabilities
Times Interest Earned
(Net Income before Interest Expense and Income Tax Expense) / Interest Expense
Accounts Receivable Turnover
Net Credit Sales / Average AR
Number of Days in AR
365 / AR Turnover
Inventory Turnover
COGS / Average Inventory
Number of Days in Inventory
365 / Inventory Turnover
Basic Inventory Equation
Beginning Inventory + Purchases = Ending Inventory + COGS
Which Inventory Costing Method will produce lower inventory turnover ratio in an inflationary economy?
First in First Out
Average Days’ Sales in Inventory
365 / Inventory Turnover
Profit Margin
Net Income / Sales
Return on Assets
Net Income / Average Total Assets
Return on Equity
Net Income / Average Common Stockholders’ Equity
Earnings Per Share
Net Income - Preferred Dividends / Weighted Average Common Shares Outstanding
Price Earnings Ratio
Stock Price Per Share / Earnings Per Share
Book Value Per Share
Total Owners Equity / Number of shares outstanding
Finding the number of shares outstanding
Number of shares issued - treasury stock
What is the Defensive Interval Ratio
is the ratio of quick assets to daily operating expenditures.
Successful use of leverage is evidenced by
Rate of return on investment greater than the cost of debt.
