Financial Statment Ratios/Performance Metrics

Question 1

How do you calculate the price-to-earnings ratio?

Answer 1

Price Per Share/ EPS

EPS = (Net Income - Preferred Dividends)/Weighted-average # of shares

Question 2

How do you calculate the dividend payout ratio?

Answer 2

Cash Dividends Paid/Net Income

Question 3

How do you calculate the average AR turnover?

Answer 3

Take net credit sales/Average AR

Question 4

What is the return on assets?

Answer 4

Net income/Average assets

Question 5

What is DSO?

Answer 5

Days Sales Outstanding:
AR/ Average day’s sales on credit..AKA sales on credit/365

Question 6

How do you calculate earnings per share

Answer 6

Net income-preferred dividends/ Weighted-average common shares outstanding

Question 7

How do you calculate the dividends per share payout ratio?

Answer 7

Dividends per share/Earnings Per Share

Question 8

How do you turn AR turnover into days?

Answer 8

Take 360 or 365/ AR turnover

Question 9

Sales - COGS =

Answer 9

Gross Profit in a multi-step income statement

Question 10

How do you calculate average days sales in inventory?

Answer 10

365/Inventory Turnover

Question 11

How do you calculate inventory turnover?

Answer 11

COGS/Average Inventory

Question 12

How do you calculate times interest earned?

Answer 12

Income before interest expense & taxes/interest expense

Question 13

What is the return on sales?

Answer 13

Net operating Profit/Sales

Question 14

How do you calculate the operating profit margin?

Answer 14

Sales - COGS - General and Admin / Sales

Question 15

How do you calculate return on common stockholders’ equity?

Answer 15

Take Net income - Preferred dividends/Average common stockholders equity