Exam 1 Flashcards
Debt to Equity Ratio
Total Liabilities/Shareholder’s Equity
Current Ratio
Current Assets/Current Liabilities
higher=higher capability of repaying debt
Quick Ratio
(Current Assets-Inventories)/Current Liabilities
higher=better position of the company
Return on Equity (ROE)
(Net Income/Sales) x (Sales/Assets) x (Assets/Equity)
higher=higher profitability
Profit Margin
Net Income/Sales
Efficiency Ratio
Sales/Assets
aka: turnover
Leverage
Assets/Shareholders Equity
Debt Ratio
(1- (Equity/Assets))
Price to Earnings Ratio
Market Value Per Share/Annual Earnings Per Share
higher=higher growth rate
PEG Ratio
Price to Earnings Ratio/Annual EPS Growth
lower=better value
Dividend Yield
%= (Market Price Per Share/Dividends Per Share) x 100
higher=high returns to investors
Price to Book Ratio
Market Price per Share/Book Value per Share
BV per share= (Total SH Equity-Preferred Equity)/Common Shares Outstanding
Higher=better
Market to Book Ratio
Total Market Capitalization/Total Book Value
Total BV=Total SH Equity-Preferred Equity
Required Rate of Return
Ri=Rf + Beta (Rm-Rf)
Discounted Dividend Model
Po=(Do(1+g))/(Ri-g)
