chapter 1 equations Flashcards
ROI (return on investment)?
Investment Turnover X profit margin
or net operating income divided by average invested assets
investment turnover?
sales revenue divided by average invested assets
Proft margin?
net operating income divided by sales revenue
Net operating income is composed of what?
sales- COGS - operating expenses or other expenses
REsidual income?
net operating income - (average invested assets X hurdle rate)
What are 3 types of ratios in ratio analysis?
profitablity, liquidity, solvency
what are the profitability ratios?
net profit margin, gross profit percentage, fixed asset turnover, return on equity, earnings per share, price/earnings ratio
what are the liquidity ratios?
receivables turnover and days to collect that, inventory turnover and days to collect that
what are solvency ratios?
debt to assets, times interest earned
what is the net profit margin equation?
net income divided by revenues X 100
what is the gross profit percentage equation?
net sales revenue - COGS divided by net sales revenue X 100
what is year to year change % ?
current year - previos year divided by previos year X 100
what is the fixed asset turnover equation?
net revenue diveded by average net fixed assets
what is the return on equity equation?
net income - preferred dividends divided by average common stockholders equity X 100
earnigns per share?
net income - preferred dividends divided by average number of common shares outstanding
