[2.2] Financial Analysis Ratios

Question 1

[Profitability] Return on Sales (ROS)

Answer 1

EBIT/Net Sales

Question 2

[Profitability] Return on Equity (ROE)

Answer 2

Net Profit/Average Shareholders Equity

Question 3

[Profitability] Return on Assets (ROA)

Answer 3

Net Profit/Total Assets

Question 4

[Profitability] Return on Capital Employed (ROCE)

Answer 4

EBIT/Total Assets

Question 5

[Profitability] Net Profit Margin

Answer 5

Net Profit/Net Sales

Question 6

[Liquidity] Net Working Capital

Answer 6

Current Assets-Current Liabilities

Question 7

[Liquidity] Current Ratio

Answer 7

Current Assets/Current Liabilities

Question 8

[Liquidity] Quick Ratio

Answer 8

(Cash+Marketable Securities+Receivables)/Current Liabilities

Question 9

[Liquidity] Cash Ratio

Answer 9

(Cash+Marketable Securities)/Current Liabilities

Question 10

[Financial] Financial Autonomy

Answer 10

Equity/Assets

Question 11

[Financial] Solvency

Answer 11

Equity/Debt

Question 12

[Leverage] Total Debt Ratio

Answer 12

Total Liabilities/Total Assets

Question 13

[Leverage] Long-Term Debt Ratio

Answer 13

Long-Term Debt/Total Assets

Question 14

[Leverage] Debt to Equity

Answer 14

Debt/Equity

Question 15

[Leverage] Times Interest Earned Ratio (TIE)

Answer 15

EBIT/Annual Interest Expenses

Question 16

[Efficiency] Average Collection Period (ACP)

Answer 16

Receivables/Net Sales * Period

Question 17

[Efficiency] Average Payment Period (APP)

Answer 17

Payables/Purchases * Period

Purchases = Cost of Goods Sold + I_f - I_i
Cost of Goods Sold = ~Gross Income of the value of the sales
I_f = final inventory
I_i = initial inventory

Question 18

[Efficiency] Inventory Turnover Ratio

Answer 18

Cost of Goods Sold/Average Inventory

Question 19

[Efficiency] Asset Turnover Ratio

Answer 19

Net Sales/Total Assets

Question 20

[Efficiency] Productivity

Answer 20

Gross Added Value/Number of Workers