Financial Ratio Summary Flashcards
Current ratio
current assets / current liabilities
Quick (acid test) ratio
(cash + marketable securities + accounts receivable) / current liabilities
Cash ratio
(cash + marketable securities) / current liabilities
cash flow ratio
operating cash flow / current liabilities
net working capital ratio
net working capital / total assets
degree of financial leverage
% change in net income / % change in EBIT
EBIT / EBT
degree of operating leverage
% change in EBIT / % change in sales
contribution margin / EBIT
financial leverage ratio (equity multiplier)
assets / equity
debt to equity ratio
total debt / equity
long-term debt to equity ratio
(total debt - current liabilities) / equity
debt to total assets ratio
total debt / total assets
fixed charge coverage
earnings before fixed charges and taxes / fixed charges
fixed charges include interest, required principal repayment, and leases
interest coverage (times interest earned)
EBIT / interest expense
cash flow to fixed charges
(cash from operations + fixed charges + tax payments) / fixed charges
accounts receivable turnover
credit sales / average gross accounts receivable
inventory turnover
cost of goods sold / average inventory
accounts payable turnover
credit purchases / average accounts payable
days sales in receivables
average accounts receivable / (credit sales / 365)
365 / accounts receivable turnover
days sales in inventory
average inventory / (cost of sales / 365)
365 / inventory turnover
days purchases in payables
average payables / (purchases / 365)
365 / payables turnover
operating cycle
days sales in receivable + days sales in inventory
cash cycle
operating cycle - days purchases in payables
total asset turnover
sales / average total assets
fixed asset turnover
sales / average net property, plant, and equipment
gross profit margin percentage
gross profit / sales
operating profit margin percentage
operating income / sales
net profit margin percentage
Net income / sales
EBITDA margin
EBITDA/sales
ROA
net income / average total assets
ROE
net income / average equity
market to book ratio
current stock price / book value per share
price earnings ratio
market price per share / EPS
book value per share
(total stockholders’ equity - preferred equity) / number of common shares outstanding
basic EPS
(net income - preferred dividends) / weighted average common shares outstanding
number of shares outstanding is weighted by the number of months shares are outstanding
diluted EPS
(net income - preferred dividends) / diluted weighted average common shares outstanding
Diluted EPS adjusts common shares by adding shares that may be issued for convertible securities and options
earnings yield
EPS / current market price per common share
dividend yield
annual dividends per share / market price per share
dividend payout ratio
common dividend / earnings available to common shareholders
shareholder return
(ending stock price - beginning stock price / annual dividends per share) / beginning stock price
DuPont ROA
net profit margin x total asset turnover
(net income / sales) x (sales / average total assets)
net income / average total assets
DuPont ROE
ROA x financial leverage
(net income / average total assets) x (average total assets / average equity)
net income / average equity
sustainable growth rate
(1 - dividend payout ratio) x ROE
net working capital
current assets - current liabilities
breakeven point in units
fixed costs / unit contribution margin
breakeven point in dollars
fixed costs / (unit contribution margin / selling price)
margin of safety
planned sales - breakeven sales
margin of safety ratio
margin of safety / planned sales
price elasticity of demand
(change in quantity / average of quantities) / (change in price / average of prices)
profitability index
pv of future cash flow / initial investment
