Financial Ratios Flashcards
Working Capital =
Current Assets – Current Liabilities
Current Ratio =
Current Assets / Current Liabilities
Acid Test (Quick) Ratio =
(Cash + Marketable Securities + AR + Current Liabilities + Short Term Notes Payable) / Total Liabilities
Accounts Receivable Turnover =
AVG AR Balance
Average Collection Period =
AR Turnover
Inventory Turnover =
AVG Inventory Balance
Average Sale Period =
Inventory Turnover
Operating Cycle =
AVG Sale Period + AVG Collection Period
Total Asset Turnover =
AVG Total Assets
Gross Margin =
Sales - COGS
Gross Margin % =
Gross Margin / Sales
Debt-to-Equity Ratio =
Total Liabilities / Stockholder’s Equity
Times Interest Earned =
Earnings Before Interest Expense and Income Taxes / Interest Expense
Equity Multiplier =
AVG Total Assets / AVG Stockholder’s Equity
Return on Total Assets =
(Net Income + [Interest Expense * ( 1 - Tax Rate)]) / Average Total Assets
