Financial Reporting Analysis

Question 1

Current Ratio

Answer 1

Current Asset / Current Liabilities

Question 2

Quick ratio

Answer 2

(Cash+Receivables+Marketable Securities/ Current Liabilities

Question 3

Cash Ratio

Answer 3

Cash + Marketable Securities / Current Liabilities

Question 4

Defensive Interval

What for

Answer 4

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.

Question 5

Activity Ratio

Answer 5

Income Statement item / Balance sheet Item

Question 6

Inventory turnover

Answer 6

COGS (IS) / Avg. Inventory

Question 7

Days of Inventory on hand

Answer 7

Number of days in period / Inventory turnover

Question 8

Receivable Turnover

Answer 8

Revenue / Average receivable

Question 9

Days of sales outstanding

Answer 9

Number of days in Period (=365) / Receivables turnover

or Avg. receivable / Sales [inverse Receivables turnover] * 365

Question 10

Payable turnover

Answer 10

Purchases / Avg. trade Payables(=Ave. Accounts payable)

Avg. Accounts Payable = avg. of beginning of the year and ending balance

Question 11

Number of days payables

Answer 11

= Number of days in Period / Payable turnover

over the fiscal year, the company takes approximately xxx days to pay its suppliers.

Question 12

Cash Conversion Cycle

Answer 12

(Days of Inventory on Hand) + (Days of Sales outstanding) - (Number of days payables)

Question 13

Total Assets turnover

Answer 13

Sales / Total Assets

https://www.investopedia.com/terms/a/assetturnover.asp

Question 14

Fixed Asset turnover

Answer 14

Revenue (sales) / Avg. net fixed assets

https://www.investopedia.com/terms/f/fixed-asset-turnover.asp

Question 15

Net fixed assets

Answer 15

PP&E (Property, plant & Equipment) - net depreciation

Question 16

Working capital Turnover

Answer 16

Revenue / avg. working capital

https://www.investopedia.com/terms/w/workingcapitalturnover.asp

Question 17

Working capital

Answer 17

Current Assets - Current liabilities

Question 18

Debt to assets ratio

Answer 18

Total debt / Total Assets

Question 19

Debt to capital ratio

Answer 19

Total debt / (Total debt + total shareholder’s equity)

Question 20

Debt to equity ratio

Answer 20

Total debt / total shareholder’s equity

Question 21

Financial Leverage ratio

Answer 21

Average total assets / Average total equity

Question 22

Debt to EBITDA Ratio

Answer 22

Total debt / EBITDA

Question 23

Interest coverage ratio

Answer 23

EBIT / Interest payments

Question 24

Fixed charge coverage ratio

Answer 24

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.

Question 25

Gross profit margin

Answer 25

Gross profit / revenue

Question 26

Operation ROA

Answer 26

Operation income / av total assets

Question 27

Return on Assets

Answer 27

Net income/ Ave total assets

Question 28

Return on total capital

Answer 28

EBIT / Avg Short and Long term debt and equity

Question 29

EBIT vs EBITDA

Answer 29

Earnings before interest and taxes (EBIT) is a company’s net income before income taxes.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is another widely used indicator to measure a company’s financial performance and project earnings potential. EBITDA reflects the profitability of a company’s operational performance before deductions for capital assets, interest, and taxes.

Note that EBIT is sometimes used interchangeably with operating income, although the two can be different (depending on the company). Operating income does not include gains or losses from non-core activities, such as equipment sales or investment returns, but net income (used in calculating EBIT) does.

Question 30

DuPont

Answer 30

Question 31

DuPont Extende

Answer 31

ROE =(net income/EBT) (EBT/EBIT) (EBIT/revenue)(revenue/total assets) (total assets/total equity)
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