Financial Reporting Analysis Flashcards
Current Ratio
Current Asset / Current Liabilities
Quick ratio
(Cash+Receivables+Marketable Securities/ Current Liabilities
Cash Ratio
Cash + Marketable Securities / Current Liabilities
Defensive Interval
What for
Cash + Marketable Security + Receivables / Daily Cash Expenditure
The defensive interval ratio (DIR) is a financial liquidity ratio that indicates how many days a company can operate without needing to tap into capital sources other than its current assets.
Activity Ratio
Income Statement item / Balance sheet Item
Inventory turnover
COGS (IS) / Avg. Inventory
Days of Inventory on hand
Number of days in period / Inventory turnover
Receivable Turnover
Revenue / Average receivable
Days of sales outstanding
Number of days in Period (=365) / Receivables turnover
or Avg. receivable / Sales [inverse Receivables turnover] * 365
Payable turnover
Purchases / Avg. trade Payables(=Ave. Accounts payable)
Avg. Accounts Payable = avg. of beginning of the year and ending balance
Number of days payables
= Number of days in Period / Payable turnover
over the fiscal year, the company takes approximately xxx days to pay its suppliers.
Cash Conversion Cycle
(Days of Inventory on Hand) + (Days of Sales outstanding) - (Number of days payables)
Total Assets turnover
Sales / Total Assets
https://www.investopedia.com/terms/a/assetturnover.asp
Fixed Asset turnover
Revenue (sales) / Avg. net fixed assets
https://www.investopedia.com/terms/f/fixed-asset-turnover.asp
Net fixed assets
PP&E (Property, plant & Equipment) - net depreciation
Working capital Turnover
Revenue / avg. working capital
https://www.investopedia.com/terms/w/workingcapitalturnover.asp
Working capital
Current Assets - Current liabilities
Debt to assets ratio
Total debt / Total Assets
Debt to capital ratio
Total debt / (Total debt + total shareholder’s equity)
Debt to equity ratio
Total debt / total shareholder’s equity
Financial Leverage ratio
Average total assets / Average total equity
Debt to EBITDA Ratio
Total debt / EBITDA
Interest coverage ratio
EBIT / Interest payments
Fixed charge coverage ratio
EBIT + Lease payment / interest payments + lease payments
The fixed charge coverage ratio is a solvency ratio that measures the ability of a company to pay interest on debt.
Here, lease payments are added to EBIT as they are an obligation like interest payments. Like interest coverage ratio, higher value for this ratio implies stronger solvency.
