Ch 1-4 Flashcards
What are the 5 Liquidity ratios?
Current Ratio = Current Assets ÷ Current Liabilities
Quick Ratio = (Current Assets − Inventory) ÷ Current Liabilities
Average Collection Period = AR ÷ Daily Credit Sales
AR Turnover = Credit Sales ÷ AR
Inventory Turnover = COGS ÷ Inventory
What are the 3 Efficiency ratios?
Total Asset Turnover = Sales ÷ Total Assets
Fixed Asset Turnover = Sales ÷ Fixed Assets
OIROI = Operating Income ÷ Total Assets
*The OIROI ratio can be used as both an efficiency and a profitability ratio.
What are the 2 Financing/solvency ratios?
Debt Ratio = Total Debt ÷ Total Assets
Times Interest Earned = EBIT ÷ Interest Expense
What are the 5 profitability ratios?
ROA = Net Income ÷ Total Assets
ROE = Net Income ÷ Total Equity
Gross margin = Gross Profit ÷ Sales
Operating margin = EBIT ÷ Sales
Net margin = Net Income ÷ Sales
What is the dupont formula?
Return on Equity = Net Income/Equity
=Net Income/(Assets − Liabilities)
=Net Profit Margin×Total Asset Turnover
×Leverage Multiplier
Economic Value Added
NOPAT − (WACC × Costly Capital)
Free Cash Flow to the Firm ratio
EBIT − Cash Tax Payments + Depreciation − CAPEX − Increases in NWC
Free Cash Flow to Equity Holders ratio
NI + Depreciation − CAPEX − Increases in NWC + Increases in Net Long-Term Debt
Current Ratio
Current Assets ÷ Current Liabilities
Quick Ratio
(Current Assets − Inventory) ÷ Current Liabilities
Average Collection Period
Accounts Receivable ÷ Daily Credit Sales
Accounts Receivable Turnover
Credit Sales ÷ Accounts Receivable
Inventory Turnover
COGS ÷ Inventory
Total Asset Turnover
Sales ÷ Total Assets
Fixed Asset Turnover
Sales ÷ Fixed Assets
OIROI
Operating Income ÷ Total Assets
*The OIROI ratio can be used as both an efficiency and a profitability ratio.
Debt Ratio
Total Debt ÷ Total Assets
Times Interest Earned
EBIT ÷ Interest Expense
ROA ratio
Net Income ÷ Total Assets
ROE ratio
Net Income ÷ Total Equity
Gross Margin
Gross Profit ÷ Sales
Operating Margin
EBIT ÷ Sales
Net Margin
Net Income ÷ Sales
Balance Sheet equation
Assets= Liabilities + Equity
Net Income =
Dividends + Retained Earnings
Sustainable Growth Rate=
ROE(1-b)= NI/S x S/A x A/E x (1-b)
What is b in the Sustainable Growth Rate?
dividend payout ratio = Dividends / Net Income
Debt to Equity Ratio
Total Debt/ Total Equity
New RE=
Old RE + Sales × Net Margin × (1 − Payout Ratio) = old RE + NI - Dividends
DFN=
Projected total assets- projected total liabilities - projected total equity
