Chapter 8 - Ratio Analysis Flashcards
What relationship does the numerator have with the ratio?
Direct
If numerator goes up, ratio goes up
The denominator has what relationship with the ratio?
Inverse
If the denominator goes up, the ratio goes down
Current Ratio:
Current Assets / Current Liabilities
Quick Ratio:
Current Assets - Inventory / Current Liabilities
Accounts Receivable Turnover:
Sales (net) / Average Accounts Receivable (net)
Days Sales in Accounts Receivable:
Ending Accounts Receivable (net) / (Sales (net) / 365)
Inventory Turnover:
COGS / Average inventory
Days in Inventory:
Ending Inventory / (COGS / 365)
Accounts Payable Turnover:
COGS / Average Accounts Payable
Days in Payables Outstanding:
Ending Accounts Payable / (COGS / 365)
Cash Conversion Cycle:
Days Sales in AR + Days in inventory - Days of payables outstanding
Asset turnover:
Sales (net) / Average total assets
Profit Margin:
Net Income / Sales (net)
Return of Assets:
Net Income / Average total assets
Dupont return on assets:
Profit margin X Asset turnover
Return on equity:
Net income / Average total equity
Return on sales:
Income before interest income/expense, and taxes / Sales (net)
Gross Profit Margin:
Sales (net) - COGS / Sales (net)
Operating Cash Flow Ratio:
Cash Flow from Operations / Current Liabilities
Debt to Equity:
Total Liabilities / Total Equity
Total Debt Ratio:
Total Liabilities / Total Assets
Equity Multiplier:
Total Assets / Total Equity
Times Interest Earned:
Income before interest expense and taxes / Interest expense
Earnings per share:
Income available to common shareholders / WACSO
Price Earnings Ratio:
Price per share / Basic earnings per share
Dividend Payout:
Cash Dividends / Net Income
