Equations for exam 3 Flashcards
Basic accounting equation?
Assets = Liabilities + Stock Holders Equity
Current Ratio?
Current Assets / Current Liabilities
Working Capital?
Current Assets - Current Liabilities
Earnings Per Share?
Net Income - Preferred dividends / average common shares outstanding
Debt to Asset Ratio?
Total liabilities/ Total Assets.
How do calculate intrest?
Principle Amount x Interest rate x 1/12
Profit margin?
net income/ net sales
Gross profit margin?
gross profit/ net sales
How do you calculate gross profit?
Sales Rev - Sales discount, allowances, returns = Net Sales
Net Sales - Cost of goods sold
Inventory turnover?
Cost of Goods sold/ Avg. Inventory
Days in inventory?
365 days/ inventory turnover.
Accounts receivable turnover?
net credit sales / avg. net accounts receivable.
Average collection period?
365 / amount receivable turnover.
Times Interest earned?
Interest Expense
Asset Turnover?
Net sales / Avg. Total asset?
