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
