Ratios Flashcards
Working Capital
Current assets - Current liabilities
Current Ratio (working capital ratio)
Current assets / Current liabilities
Acid-test or Quick Ratio
(Cash equivalents + Marketable securities + Net receivables) / Current liabilities
Cash Ratio
(Cash equivalents + Marketable securities) / Current liabilities
A/R Turnover
Net credit sales / Average net receivables
A/R Turnover in days
Average net receivables / (Net credit sales / 365)
Inventory Turnover
Cost of goods sold / Average inventory
Inventory Turnover in days
Average inventory / (COGS / 365)
Operating cycle
A/R turnover in days + Inventory turnover in days
Working capital turnover
Sales / Average working capital
Total asset turnover
Net sales / Average total assets
Net profit margin
Net income / Net sales
Return on total assets
Net income / Average total assets
DuPont return on assets
Net profit margin x Total asset turnover
Return on Investment
[Net income + Interest expense x (1 - tax rate)] / [Average (Long-term liabilities + Equity)]
