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