Chapter 14 Company Analysis KT Flashcards
A debt ratio that tests ability of a company to pay interest charges on its debt based on how many times interest is covered by available earnings.
interest coverage ratio
Financial ratios that are used to judge the company’s ability to meet its short-term commitments.
liquidity ratios
A financial ratio that shows a company’s ability to cover its debt obligations with its assets after all non-debt liabilities have been satisfied.
asset coverage ratio
Current assets of a company divided by its current liabilities.
working capital ratio
A profitability ratio that shows the company’s rate of profit after allowing for cost of sales.
gross profit margin ratio
A financial ratio that gauges a company’s ability to repay the funds it has borrowed.
cash flow-to-total debt outstanding ratio
Financial ratios that show how well the company can deal with its debt obligations.
risk analysis ratios
The relationship between a stock’s current price and the present value of all future dividend payments; used to determine the price at which a stock should be selling.
dividend discount model
A type of ratio that illustrates how well management is making use of company resources.
operating performance ratios
What ratio measures efficiency of a company in selling its inventory? May also be expressed as the number of days required to sell inventory if divided by 365.
inventory turnover ratio
Financial calculations based on a company’s financial statements, often providing clues about the company’s financial health.
financial ratios
A profitability ratio that indicates how efficiently the company is managed after taking into account both expenses and taxes.
net profit margin ratio
Financial ratios that show the investor the worth of the company’s shares or the return on owning them.
value ratios
A ratio that measures liquidity more stringently by excluding inventory to focus on a company’s more liquid assets.
quick ratio
A liquidity ratio that shows a company’s ability to pay its current obligations from current assets.
current ratio
