FAR Ratios Flashcards
1
Q
What is the quick ratio?
A
Current assets less inventory & prepaid assets
divided by
Current liabilities
Note:
A/R is net
Trading debt securities are current assets
2
Q
What is the ratio for the number of days’ sales in average inventories?
A
Days sales in inventory =
(Avg Inventory / COGS) * #of working days in year
3
Q
What is the rate of return on assets ratio?
A
Net income / Average Assets
