Chapter 7 Section 4: Ratios Flashcards
Working capital
Current assets - current liabilities
Current ratio
Current assets/current liabilities
Acid-test ratio
cash equivalents + marketable securities + net receivables/current liabilities
Cash ratio
Cash equivalents + marketable securities/current liabilities
Accounts receivable turnover
Net credit sales/average net receivables
Accounts receivable turnover in days
Average net receivables/(net credit sales/365)
or
365 days/receivable turnover
Inventory turnover
COGS/average inventory
Inventory turnover in days
Average inventory/(COGS/365)
or
365 days/inventory turnover
Operating cycle
AR turnover in days + inventory turnover in days
Working capital turnover
Sales/Average working capital
Total asset turnover
Net sales/average total assets
Net profit margin
Net income/net sales
Return on total assets
Net income/average total assets
DuPont return on assets
net profit margin x total asset turnover
or
(net income/net sales) x (net sales/average total assets)
Return on investment
[net income+(int exp x 1-tax rate)]/average(LT lia+equity)
