Financial Ratios Flashcards
Current ratio
current assets / current liabilities
cash ratio
cash and cash equivalents / current liabilities
debt ratio
total liabilities / total assets
debt to equity ratio
total liabilities / shareholder’s equity
interest coverage ratio
operating income / interest expenses
debt service coverage ratio
operating income / total debt service
asset turnover ratio
net sales / average total assets
inventory turnover ratio
cost of goods / average inventory
receivables turnover ratio
net credit sales / average accounts receivable
gross margin ratio
gross profit / net sales
operating margin ratio
operating income / net sales
return on assets ratio
net income / total assets
return on equity ratio
net income / shareholder’s equity
Operating profit margin
(gross profit - other operating expenses) / revenues
quick ratio
quick ratio = (cash and accounts receivable) / current liabilities
* it measures company’s ability to meet short-term obligations with its most liquid assets
