Ratios Flashcards
1
Q
Accounts receivable turnover
A
Net credit sales/average net accounts receivable (less allowance for doubtful accounts). If asking for average collection period take the result of the earlier equation and do 360/x to get days.
2
Q
Quick ratio (acid test ratio, liquidity ratio)
A
Cash and cash equivalents + marketable securities + accounts receivable/ Current Liabilities.
3
Q
Inventory turnover
A
COGS/ average inventory (beginning+ending/2)
4
Q
Current ratio
A
Current assets / Current liabilities
5
Q
Profit margin on sales
A
net income/sales
6
Q
Return on equity
A
net income/ average outstanding equity
