F2 M7 Flashcards
1
Q
A
Key ratio categories: Liquidity (are you liquid enough to pay bills when due?), activity
(are active assets creating rev?), profitability (am I generating a profit?), coverage ratios,
and investor ratios
2
Q
A
Working capital = CA - CL
3
Q
A
Current ratio = CA/CL
4
Q
A
Quick/acid-test ratio: cash and cash equivalents + short-term marketable securities +
Receivable (net) / CL
5
Q
A
AR turnover ratio: Sales (net) / avg AR (net)
6
Q
A
Days Sales in AR = Ending AR (net) / (sales (net) / 365)
7
Q
A
Profit margin = NI/Sales (net)
8
Q
A
Return on assets ratio (ROA): NI/avg total assets
9
Q
A
Gross (profit) margin ratio: Sales (net) - COGS / sales (net)
10
Q
A
Debt-to-equity ratio: Total liabilities / total equity
11
Q
A
Times interest earned ratio = Income before interest exp and taxes / interest exp
