chapter 3 Flashcards
Sources vs uses of cash:
Source: When we sell something / A decrease in assets/increase in liability or equity
Use: When we buy something /increase in asset/decrease in liability or equity
Five categories of financial ratios:
Short-term solvency or liquidity ratios
Long-term solvency or financial leverage ratios
Asset management or turnover ratios
Profitability ratios
Market value ratios
Current ratio:
Current asset/current liability
Total asset turnover ratio:
Sales/ total assets
debt-equity ratio:
Total debt/total equity
Total equity= Total asset- total liability
Profit Margin:
Net income/sales
Equity Multiplier:
1+ debt equity ration (Total debt/ (total asset-total liability)
Return on asset:
Net income/total asset
Return on equity:
Net income/ total equity
again total equity = total asset- total liability
Inventory turnover:
cost of gold sold/inventory
Total debt ratio:
(Total asset-total equity)/ Total asset)
again total equity = total asset- total liability
Quick ratio:
(Current asset-Inventory)/ current liability
