BF Flashcards
RETURN OF EQUITY
NET INCOME ÷ STOCKHOLDERS EQUITY × 100%
RETURN OF ASSETS
OPERATING INCOME ÷ TOTAL ASSETS ×100%
GROSS PROFIT MARGIN
gross profit ÷ sales x 100%
OPERATING PROFIT MARGIN
operating income ÷ sales x 100%
NET PROFIT MARGIN
Net income ÷ sales ×100%
TOTAL ASSETS TURNOVER RATIO
net sales ÷ total asset
FIXED ASSET TURNOVER RATIO
net sales ÷ ppe
ACCOUNTS RECEIVABLE TURNOVER RATIO
Net sales ÷ Gross trade accounts receivable
AVERAGE COLLECTION PERIOD
360 ÷ Gross trade accounts receivable ratio
INVENTORY TURNOVER RATIO
Cost of sales ÷ inventories
DAYS INVENTORIES
360÷ Inventory turnover ratio
ACCOUNTS PAYABLE TURNOVER RATIO
Cost of sales ÷ Trade account payable
DAYS PAYABLE
360 ÷ Accounts payable turnover ratio
OPERATING CYCLE
Days inventories + Days receivable
Cash Conversion Cycle
Operating cycle - days payable
CURRENT RATIO
CURRENT ASSETS ÷ CURRENT LIABILITIES
ACID TEST RATIO OR QUICK ASSET RATIO
(Cash + current accounts receivable+ short term marketable securities)/ current liabilities
other formula for quick asset ratio
(Current assets - inventories )/ Current liabilities
DEBT RATIO
Total liabilities ÷ total assets
DEBT TO EQUITY RATIO
Total liabilities ÷ Equity
Interest Coverage ratio
operating income ÷ interest income
INTERPRETATION FOR ROE
For every ₱1 of owners equity, ___ was earned.
INTERPRETATION FOR ROE
For every ₱1 of owners equity, __ was earned in (year).
INTERPRETATION FOR ROA
the company enerated ____ operating income for every ₱1 of an asset in the company
INTERPRETATION FOR GROSS PROFIT MARGIN
For every ₱1 of sales the company generates, it earns __ in gross profit
INTERPRETATION FOR OPERATING PFORIT MARGIN
out of ₱1 net sales that the company generated in the year, the company earned __ after deducting the cost of sales and operating expenses
INTERPRETATION FOR NET PROFIT MARGIN
The company earned __ for every ₱1 of net sales generated
INTERPRETATION OF TOTAL ASSETS TURNOVER RATIO
For every ₱1 of assets the company has in the year, it was able to generate net sales of ___
INTERPRETATION FOR FIXED ASSET TURNOVER RATIO
The company was able to generate __ net sales for every ₱1 of PPE that it has
INTERPRETATION FOR ACCOUNTS RECEIVABLE TURNOVER RATIO and AVERAGE COLLECTION PERIOD
The company had an average of __ days collecting its accounts receivalbe
INTERPRETATION FOR INVENTORY TURNOVER RATIO
the company took _days on average, to sell its inventories from the time they were bough
INTERPRETATION FOR ACCOUNTS PAYABLE TURNOVER RATIO and DAYS PAYABLE
The average payment period of the company for its trade accounts payable was _days
INTERPRETATION FOR CURRENT RATIO
for every ₱1 of current liabilities that the company has, it has _ current assests as of …
INTERPRETATION FOR ACID TEST RATIO OR QUICK ASSET RATIO
for every ₱1 current liability the company has, it has _ in quick asset
INTERPRETATION FOR DEBT RATIO
if less than .50 it has less liabilities as comapred to stockholders equity
INTERPRETATION OF DEBT TO EQUITY RATIO
(based on debt ratio) it is expected that its debt to equity is less.than one
INTERPRETATION FOR INTEREST COVERAGE RATIO
_ means that the company has more than enough operating income to cover its interest expense.
HORIZONTAL ANALYSIS
change since base period = (current year amount - base year amount) / base year amount
% change = [ ( sales²⁰¹⁹- sales ²⁰¹⁸) ÷ sales ²⁰¹⁸,] × 100 %
VERTICAL ANALYSIS
SFP= cash ÷ total assets × 100%
SOPL= cost of sale ÷ net sales × 100%
STATEMENT OF PROFIT OR LOSS
Revenue
Cost of good sold (beg, inv. + pur - end inv)
gross profit
operating expense
operating income
Interest expense
Income before taxes
taxes
Net income
science and art of managing money
finance
deals with managing individual expenses
personal finance
managing the cash of a corporation
corporate finance
managaing the cash and the finanacial respurces of a government entity
public finance
the act of estimating revenue (in the form of their allowance) and exepenses over a period of time
bugeting
(utilization of fund) allocating resources, usually money tith the expectation of geberating an income or profit
investment
