All Equations Flashcards
Current Ratio
Current Assets/Current Liabilities
Earnings Per Share
(Net Income-Preferred Stock Dividend)/Weighted Average of Common Shares Outstanding
Return On Assets
Net Income/ AVG Total Assets
Asset Turnover
Net Sales/AVG Total Assets
Gross Profit Percentage
The rate at which a company earns
gross profit on its sales revenue
GPP=Gross Profit On Sale/Net Sales
Return On Sales Ratio
reveals the net income earned on
each dollar of net sales
net income/net sales
Accounts Receivable Turnover
indicates how many times a year a firm collects its average accounts receivable (how fast accounts receivable are being converted into cash)
ACTS REC TO=NET SALES/AVG ACTS REC (NET)
Debt To Total Asset Ratio
provides a measure of this risk and is one ratio used to assess a company’s solvency
Total Liabilities/Total Assets
Average Collection Period
This ratio indicates how many days it takes on average to collect an account receivable
AVG Collection Period=365/ACTS REC TO
Straight Line Depreciation Method
Annual Depreciation=(Acquisition Cost-Salvage Value)/Estimated Useful Life (in months or years)
Double Declining Balance Method of Depreciation
ccelerated depreciation method calculates a
company’s depreciation expense as a constant percentage of an asset’s book value as of the beginning of each period
Annual Dep=Book value at beginning of year*double declining balance rate
Units of Production Method of Depreciation
allocates depreciation in proportion to an asset’s use in
operations.
Depreciation Per Unit= (Acquisition Cost-Salvage Value)/Total Estimated Units of Production
Annual Depreciation Method
Depreciation per unit × Units of production for the period
Return on Common Stockholders’ Equity
return on common stockholders’ equity=(net preferred stock dividend/AVG common stockholder equity)
Dividend Yield
Dividend Yield=Annual Dividend Per Share/Market Price Per Share
Dividend Payout Ratio
Dividend Payout Ratio=Annual Dividend Per Share/Earnings Per Share
Free Cash Flow
Cash flow from operations - Capital expenditures
Net Sales
gross sales revenue generated through merchandise sales less any sales revenue given up through sales returns and allowances and any earned sales (cash) discounts
GS from Merch-Sale Rev given up through sales returns and allowances or any earned sales discout
Gross Profit On Sales
reveals the amount of sales revenue
remaining after subtracting the cost of products sold
Net Sales-COGS
