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CPA Audit > Audit Ratios > Flashcards

Audit Ratios Flashcards

1
Q

Liquidity Ratios

A

Short term ability to pay maturing obligations

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2
Q

Activity Ratios

A

How effectively an enterpirse is using its Assets

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3
Q

Profitability Ratios

A

Financial performance

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4
Q

Investor Ratios

A

Interest investors

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5
Q

Long Term Debt paying Ability Ratios

A

Secuirty for long term creditors/investors

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6
Q

Working Capital

A

Current Assets - Current Liabilities

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7
Q

Current Ratio

A

Current Assets / Current Liabilities

Indicates how short term obligations are

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8
Q

Acid Test Ratio

A

Cash + Market securities + A/R / Current Liabilities

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9
Q

Cash Ratio

A

Cash + Market Securities / Current Liabilities

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10
Q

Accounts Receivable Turnover

A

Net Credit Sales / Average net receivables

Average Net Receivables = Y2 - Y1 / 2

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11
Q

A/R turnover in days

A

365/Accounts Receivable turnover

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12
Q

Inventory Turnover

A

COGS / Average Inventory

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13
Q

Inventory Turnover in Days

A

365 * 1/Inventory Turnover =

365 * Average Inventory/COGS

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14
Q

Operating Cycle

A

AR turnover in Days + Inventory Turnover in Days

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15
Q

Working Capital Turnover

A

Sales / Average Working Capital

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16
Q

Total Asset Turnover

A

Sales / Average total Assets

17
Q

Accounts Payable Turnover

A

Purchases / Average Accounts Payable

Note: Beginning Inventory + Purchases - COGS = Ending Inventory

18
Q

Days in Accounts Payable

A

365 / Accounts Payable Turnover

19
Q

Net Profit Margin

A

Net Income / Net Sales

CPA Audit (2 decks)

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