Ch.17 Ratios Flashcards
Acid test ratio
Immediate short term debt paying ability (1 to 1)
Receivables turnover
how many times receivables are collected during a year (times) the more the better “could include N/R”
Average collection period
how many days to collect receivables (days) the less the better
Inventory turnover
how many times inventory is sold during a year (times) the more the better
Average days to sell inventory
how many days to sell inventory (days) the less the better
Total asset turnover
how efficiently assets are used to generate sales (times) the higher the better
Profit margin
how much of each sales dollar becomes income (%) the higher the better
Return on total assets
how much income is made on each dollar of assets (%) the higher the better
Return on common stockholder’s equity
how much income is made for common stockholder’s (%) the higher the better
Current Ratio
Short term debt paying ability (2 to1)
