Financial Ratios

Question 1

Current Ratio

Answer 1

Total Current Assets
/
Total Current Liabilities

Want >1.0

Question 2

Quick Ratio (Acid Test)

Answer 2

Cash + Marketable Securities+Receivables
/
Total Current Liabilities

Want >1.0

Question 3

Debt Ratio

Answer 3

Total Liabilities
/
Total Assets

Want ~0.5

Question 4

Interest Coverage Ratio

Answer 4

Earnings BEFORE Interest and Taxes
/
Interest Expense

Want >1.0

Question 5

Inventory Turnover Ratio

Answer 5

COGS
/
Avg Inventory

Higher the better

Question 6

Asset Turnover Ratio

Answer 6

Sales
/
Avg Total Assets

Higher the better

Question 7

Profit Margin Ratio (Returns on Sales)

Answer 7

Net Income
/
Sales

Question 8

Return on Assets Ratio

Answer 8

Net Income
/
Avg Total Assets

Question 9

Dupont Formula

Answer 9

ROE = Net Income / Equity = (Net Income / Sales) * (Sales / Assets) * (Assets / Equity)

aka = Net Profit Margin * Asset Turnover * Financial Leverage

Question 10

Days Receivable

Answer 10

365 * (Avg Receivables / Sales)

Question 11

Receivable Turnover

Answer 11

Sales / Avg Receivables

Question 12

Days Inventory

Answer 12

365 * (Avg Inventory / COGS)

Question 13

Inventory Turnover

Answer 13

COGS / Avg Inventory

Question 14

Days Payable

Answer 14

365 * (Average Payables / COGS )

Question 15

Payable Turnover

Answer 15

COGS / Avg Payables

Question 16

Return on Average Equity

Answer 16

Net Income / Average Equity

Question 17

Return on Average Assets

Answer 17

Net Income / Average Assets

Question 18

Debt to Equity Ratio

Answer 18

Total Liabilities / Total Stockholders Equity