F7 - Financial Ratios Flashcards
Current ratio
Current assets / current liabilities
Acid-test ratio
Cash (& equivalents) + marketable securities + net A/R / current liabilities
Cash ratio
Cash (& equivalents) + marketable securities / current liabilities
A/R turnover
Net credit sales / average net receivables
A/R turnover (in days)
Average net receivables / (net credit sales/365)
Inventory turnover
COGS / average inventory
Inventory turnover (in days)
Average inventory / (COGS/365)
Operating cycle
A/R turnover (in days) + inventory turnover (in days)
Working capital 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
Return on investment
Net income + interest expense x (1 - tax rate) / average (liabilities + equity)
Return on common equity
(Net income - preferred dividends) / average common equity
Debt to equity ratio
Total liabilities / common stockholders’ equity
