A3 (M7) Financial Ratios

Question 1

Current Ratio

Answer 1

Current Assets / Current Liabilities

Question 2

Quick Ratio

Answer 2

Cash and Cash Equivalents + Short-term marketable securities + Receivables (net) / Current Liabilities

Question 3

Accounts Receivable Turnover

Answer 3

Sales (net) / Average Accounts Receivable (net)

Question 4

Days Sales in Accounts Receivable

Answer 4

Ending Accounts Receivable (net) / (Sales (net) / 365)

Question 5

Inventory Turnover

Answer 5

Cost of Goods Sold / Average Inventory

Question 6

Days in Inventory

Answer 6

Ending Inventory / (Cost of Goods Sold / 365)

Question 7

Accounts Payable Turnover

Answer 7

Cost of Goods Sold / Average Accounts Payable

Question 8

Days of Payables Outstanding

Answer 8

Ending Accounts Payable / (Cost of Goods Sold / 365)