Financial Ratios

Question 1

Current Ratio

Answer 1

Current Assets CMAIPO / Current Liabilities ASAP

Question 2

Quick Ratio (Acid Test Ratio)

Answer 2

Quick Assets / Current Liabilities aka (Cash+Marketable Securities+AR/Current Liabilities)

Question 3

Cash Ratio

Answer 3

Cash + Marketable Securities / Current Liabilities

Question 4

Cash Flow Ratio

Answer 4

Operating Cash Flow / Current Liabilities

Question 5

Net Working Capital Ratio

Answer 5

(Current Assets - Current Liabilities) / Total Assets

Question 6

Degree of Operating Leverage (single period)

Answer 6

Contribution Margin / Operating Income (EBIT)

Question 7

Degree of Operating Leverage (more than one period)

Answer 7

Percentage Change in OI (EBIT) / Percentage Change in Sales (Revenue)

Question 8

Degree of Financial Leverage (single period)

Answer 8

OI (EBIT) / EBT

Question 9

Degree of Financial Leverage (more than one period)

Answer 9

Percentage change in NI / Percentage change in OI (EBIT)

Question 10

Debt to Equity Ratio

Answer 10

Total Debt / Equity

Question 11

Interest Coverage Ratio

Answer 11

Earnings Before Interest and Taxes (EBIT) / Interest Expense

Question 12

Financial Leverage Ratio

Answer 12

Assets / Equity

Question 13

Long-term Debt to Equity Ratio

Answer 13

Long-term Debt / Equity

Question 14

Debt to Total Assets Ratio

Answer 14

Total Debt / Total Assets

Question 15

Fixed Charge Coverage Ratio

Answer 15

Earnings before Fixed Charges and Taxes / Fixed Charges

Question 16

Accounts Receivable Turnover

Answer 16

Credit Sales / Average Gross Accounts Receivable

Question 17

Inventory Turnover

Answer 17

Cost of Goods Sold / Average Inventory

Question 18

Accounts Payable Turnover

Answer 18

Credit Purchases / Average Accounts Payable

Question 19

Day Sales Outstanding in Receivables

Answer 19

365 / Accounts Receivable Turnover OR 365xAverage AR / Credit Sales

Question 20

Day Sales in Inventory

Answer 20

365 / Inventory Turnover OR 365xAverage Inventory / COGS

Question 21

Day Purchases in AP

Answer 21

365 / AP Turnover OR 365xAverage Accounts Payable / Purchases on Account

Question 22

Operating Cycle Formula

Answer 22

DSI (Day Sales in Inventory) + DSO (Day Sales Outstanding in Receivables)

Question 23

Cash Cycle Formulas

Answer 23

DSI + DSO - DPAP or OC-DPAP

Question 24

Total Assets Turnover

Answer 24

Sales / Average Total Assets

Question 25

Fixed Assets Turnover

Answer 25

Sales / Average Net PP&E

Question 26

Gross Profit Margin Percentage

Answer 26

Gross Profit / Sales

Question 27

Operating Profit Margin Percentage

Answer 27

Operating Income / Sales

Question 28

Net Profit Margin

Answer 28

Net Income / Sales

Question 29

EBITDA Margin

Answer 29

EBITDA / Sales

Question 30

Return on Assets

Answer 30

Net Income / Average Total Assets

Question 31

Return on Equity

Answer 31

Net Income / Average Equity

Question 32

Market to Book Ratio

Answer 32

Market Price per Share / Book Value per Share

Question 33

Price-Earnings Ratio

Answer 33

Market Price per Share / EPS

Question 34

Price to EBITDA Ratio

Answer 34

Market Price per Share / EBITDA per Share

Question 35

Book Value per Share

Answer 35

Total Shareholders Equity - Preferred Equity / Number of Common Shares Outstanding

Question 36

Basic Earnings per Share

Answer 36

Net Income - Preferred Dividends / Weighted Average Common Shares Outstanding

Question 37

Diluted Earnings per Share

Answer 37

Net Income - Preferred Dividends / Diluted Weighted Average Common Shares Outstanding

Question 38

Earnings Yield

Answer 38

EPS / Market Price per Common Share

Question 39

Dividend Yield

Answer 39

Annual Dividends per Share / Market Price per Share

Question 40

Dividend Payout Ratio

Answer 40

Common Dividend / Earnings Available to Common Shareholders

Question 41

Shareholder Return

Answer 41

Ending Stock Price - Beginning Stock Price + Annual Dividend per Share / Beginning Stock Price