Formulas

Question 1

Liquidity Ratios

Answer 1

Assesses a business’s ability to meet its obligations in the short term

Question 2

Current Ratio

Answer 2

(Current Assets)/(Current Liabilitiies)

Question 3

Acid Test

Answer 3

(Current Assets-Inventory)/(Current Liabilitiies)

Question 4

Operating Cash Flow to Sales

Answer 4

(Operating Cash Flows)/Sales

Question 5

Free Cash Flow

Answer 5

Operating Cash Flow-Capital Expenditures

Question 6

Working Capital

Answer 6

Current Assets-Current Liabilities

Question 7

Turnover Ratios

Answer 7

Assesses the efficiency with which a company’s resources are utilized; asset utilization

Question 8

Inventory Turnover Ratio

Answer 8

(Cost of Goods Sold (COGS))/(Average Inventory)

Question 9

Receivable Turnover Ratio

Answer 9

(Credit Sales)/(Average Accounts Receivable)

Question 10

Average Collection Period

Answer 10

(365*Average Accounts Receivable)/(Credit Sales)

Question 11

Capital Turnover Ratio

Answer 11

Sales/(Average Shareholder^’ sEquity)

Question 12

Asset Turnover Ratio

Answer 12

(Total Sales)/(Average Assets)

Question 13

Fixed Asset Turnover Ratio

Answer 13

(Total Sales)/(Average Fixed Assets)

Question 14

Net Working Capital Turnover Ratio

Answer 14

Sales/(Net Working Capital)

Question 15

Operating Profitability Ratios

Answer 15

Ratios that measure a company’s profitability through the efficiency of its business activity

Question 16

Gross Profit Margin

Answer 16

(Sales-COGS)/Sales

Question 17

COGS to Sales

Answer 17

COGS/Sales

Question 18

SG&A to Sales

Answer 18

(Selling,General,& Administrative Expenses)/Sales

Question 19

Operating Profit Margin

Answer 19

(Income from Operation)/Sales

Question 20

Net Profit Margin

Answer 20

(Net Income)/Sales

Question 21

Return on Assets

Answer 21

(Earnings After Tax)/(Average Total Assets)

Question 22

Return on Equity

Answer 22

(Earnings After Tax)/(Average Shareholder^’ s Equity)

Question 23

Earnings Per Share (EPS)

Answer 23

(Earnings after Tax-Preferred Dividends)/(Average Common Stock Outstanding)

Question 24

Dividend Payout Ratio

Answer 24

(Dividends Paid)/(Net Income)

Question 25

Revenue Growth Ratio

Answer 25

(Revenue This Year-Revenue Last Year)/(Revenue Last Year)

Question 26

Debt to Assets

Answer 26

(Total Debts)/(Total Assets)
OR
(Long Term Debts)/(Total Assets)

Question 27

Debt to Equity Ratio (D/E)

Answer 27

(Total Debts)/(Shareholder’s Equity)

Question 28

Interest Coverage

Answer 28

EBITDA/(Interest Expense)

Question 29

Stability Ratios

Answer 29

Assesses the company’s stability in the long run

Question 30

Fixed Asset Ratio

Answer 30

(Fixed Assets)/(Shareholder^’ s Equity)

Question 31

Current Assets to Fixed Assets

Answer 31

(Current Assets)/(Fixed Assets)

Question 32

Coverage Ratios

Answer 32

Assesses whether a company has the resources to pay interest

Question 33

Fixed Interest Cover

Answer 33

(Net Profit Before Interest and Tax)/(Interest Expense)