Accounting Flashcards
What does Gross Profit Ratio measure? (Profitability)
Gross profit per dollar of net sales. Measures the profitability of the company.
What does the Net profit ratio measure? (Profitability)
Net profit per dollar of sales.
Measures the profitability of the company.
What does Return on shareholder’s equity measure? (Profitability)
Return on investment provided by owners
What does Return on total assets measure? (Profitability)
Measures return on all assets whether provided by owners or external parties.
What does Earning per share measure? (Profitability)
Measures the profit earned on each ordinary share.
What does the Price Earnings ratio measure? (Profitability)
The number of times the market price covers the profit per share.
What does Dividend per ordinary share measure? (Profitability)
Dividends received per share.
What does Dividend Yield measure? (Profitability)
Dividend received per share expressed as a percentage of the market price per share.
What does Current Ratio measure? (Liquidity)
Measures the business’s ability to meet current debts with current assets.
What does the Quick asset ratio measure? (Liquidity)
Ability to meet immediate debts using only most liquid assets.
What does turnover of inventories measure? (Liquidity)
How quickly inventory is sold, and thus indicates liquidity of inventories.
What does turnover of accounts receivable measure? (Liquidity)
Effectiveness of collections and whether accounts receivable are too high.
What does the equity ratio measure? (Stability)
Percentage of assets or funds provided by owners and extent of gearing.
What does debt ratio measure? (Stability)
Percentage of assets or funds provided by external parties, and extent of gearing.
What does debt/equity ratio measure? (Stability)
Ratio of debt to equity
