Balance Sheet Flashcards
1
Q
Asset Turnover Ratio measures
A
Efficiency of a company’s assets to generate sales/revenue; 2.5 and higher is good
2
Q
Return on Assets (ROA) =
A
Profit Margin * Asset Turnover
3
Q
Financial Leverage
A
Company’s use of borrowing
4
Q
Debt-to-Equity Ratio=
A
Total Liabilities / Owner’s Equity
5
Q
Debt-to-Equity ratio measures
A
A company’s reliance on debt
How much of a company is owned by creditors compared to how much S/h equity is held by company
Good D-t-E ratio is 1.0-1.5 or less
6
Q
Prepaid fees are what on the Balance Sheet?
A
Current Assets
7
Q
Retained Earnings =
A
RE=RE_{0}-NI-D
RE = retained earnings
RE_{0} = beginning retained earnings
NI = net income profit or loss
D = dividend
