Topics 2: Financial Ratios Flashcards Preview

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Flashcards in Topics 2: Financial Ratios Deck (9):
1

What are the two kinds of ratio analysis?

time series analysis
cross-sectional analysis

2

What are the types of financial ratios

liquidity
activity
leverage
profitability

3

What are the liquidity ratios

current ratio
quick, acid test, ratio
net working capital (not ratio)

4

What are the activity ratios

accounts receivable turnover
average collection period

inventory turnover
average age of inventory

average payment period

5

What are the debt ratios

debt ratio
long term debt to equity ratio
times interest earned

6

What are the types profitability ratios?

investment ratio
margin ratios

7

What are the margin ratios

gross profit margin
operating profit margin
net profit margin

8

What are the investment ratio

earnings per share
price/earnings ratio

9

What are the limitations of ratio

single ratio not sufficient
not dated to same point, distortion
unaudited, dubious figure
different accounting policies, distort
historical, economic conditions change