Ratios Flashcards
1
Q
Gross Profit Percentage
A
Calculated by dividing Gross Profit by Net Sales.
2
Q
Working Capital
A
The difference between total Current Assets and Current Liabilities. It is a measure of of the firm’s ability to pay its current obligations.
3
Q
Current Ratio
A
Current Assets divided by Current Liabilities.
Provides a measure of a firm’s ability to pay its current debts.
4
Q
Accounts Receivable Turnover
A
ART= Net Credit Sales/Average Accounts Receivable
5
Q
Inventory Turnover
A
Inventory Turnover = Cost of Goods Sold/Average Inventory
Average Inventory = Beg Inv + End Inv/2
