Formulas 1 Flashcards
Current Ratio
Current Assets/Current Liabilities.. High current ration indicated liquidity. Expect at least 1
Quick Ratio
Current Assets-Inventory/Current Liabilities.. Inventory is Illiquid
Cash Ratio
Cash/Current Liabilities
Total Debt Ratio
(Total Assets-Total Equity)/ Total Assets… Takes into account all debts of all maturities to all creditors
Debt-Equity Ratio
Total Debt/Total Equity
Times Interest Earned
EBIT/Interest How well a company has its interest obligations covered
Inventory Turnover
COGS/Inventory How many times sold off inventory
Days’ sales in inventory
365/Inventory Turnover How long it took on average
Receivables Turnover
Sales/Average Accounts Receivable How many times collected receivables
Days Sales in Receivables
364/ Receivables Turnover
Total Asset Turnover
Sales/Total Assets Every Dollar in Assets generated how much in sales
Profit Margin
Net Income/Sales Profit per dollar of sales
Operating Margin
Operating Income/Sales
Return on Assets
Net Income/Total Assets Measure of Profit per dollar of assets
Return on Equity
How Stockholders fared during the Year Net Income/Total Equity
