FRA Ratios & Metrics

Question 1

What is the Quick Ratio?

Answer 1

Cash + Marketable Securities + Receivables / Current Liabilities

Question 2

What is the Cash Ratio?

Answer 2

Cash + Marketable Securities / Current Liabilities

Question 3

What is the Defensive Interval?

Answer 3

Cash + Marketable Securities + Receivables / Daily Cash Expenditures

Question 4

What is Receivables Turnover?

Answer 4

Annual Sales / Average Receivables

Question 5

What is Inventory Turnover ?

Answer 5

Cost of Goods Sold / Average Inventory

Question 6

What is Payables Turnover Ratio?

Answer 6

Purchases / Avg. Trade Payables

Question 7

Days of Sales Outstanding (DSO)

Answer 7

365 / Receivables Turnover

Question 8

Days of Inventory On Hand

Answer 8

365 / Inventory Turnover

Question 9

Number of Days of Payables

Answer 9

365 / Payables Turnover Ratio

Question 10

Cash Conversion Cycle

Answer 10

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

Question 11

Total Asset Turnover

Answer 11

Revenue / Avg. Total Assets

Question 12

Fixed Asset Turnover

Answer 12

Revenue / Average Fixed Assets

Question 13

Working Capital Turnover

Answer 13

Revenue / Average Working Capital

Question 14

Gross Profit Margin

Answer 14

Gross Profit / Revenue

Question 15

Operating Profit Margin

Answer 15

Operating Profit / Revenue = EBIT /Sales

Question 16

Net Profit Margin

Answer 16

Net Income / Revenue

Question 17

Return on Assets (Total Capital)

Answer 17

EBIT / Avg. Total Capital

Question 18

Debt to Equity Ratio

Answer 18

Total Debt / Total Equity

Question 19

Total Debt Ratio

Answer 19

Total Debt / Total Assets

Question 20

Interest Coverage

Answer 20

EBIT / Interest

Question 21

Fixed-Charge Coverage

Answer 21

EBIT + Lease Payments / Interest + Lease Payments

Question 22

Growth Rate (g)

Answer 22

g = RR x ROE

Question 23

Current Ratio?

Answer 23

Current Assets/Current Liabilities

Question 24

Return on Equity (1)

Answer 24

ROE=(Net Income/EBT)x(EBT/EBIT)x(EBIT/Revenue)x(Revenue/avg. total assets)x(avg. total assets/avg. total equity)

Question 25

Return On Equity (2)

Answer 25

ROE=Tax Burden x Int. Burden x EBIT Margin x Asset Turnover x Leverage

Question 26

LIFO Results in:

Answer 26

Higher COGS, Lower gross profit, lower inventory balances

Question 27

FIFO results in…

Answer 27

Lower COGS, Higher gross profit, higher inventory balances

Question 28

Basic EPS

Answer 28

NI - Pref. Div./Wghtd. Avg. # of common shares outstanding

Question 29

Diluted EPS

Answer 29

Adj. Income avail for common shares/wtd. Avg. common shares + potential common shr outstanding

Question 30

Straight-Line Depreciation

Answer 30

Cost - Residual Value / Useful Life

Question 31

Double-Declining Balance Depreciation

Answer 31

(2 / Useful Life) x (cost - accumulated depreciation)

Question 32

Units of Production Depreciation

Answer 32

Cost - Salvage Val. / Useful Life in units x output units

Question 33

Cash Flows from Operations (CFO):

Direct Method

Answer 33

Cash collections, cash inputs, cash opex, cash int. exp., cash taxes

Question 34

Free Cash Flow (FCF)

Answer 34

Measures cash available for discretionary purposes. It is equal to operating cash flow less net capital expenditures.

Question 35

Common Size Balance Sheet

Answer 35

Expresses all balance sheet accounts as a percentage of total assets.

Question 36

Common Size Income Statement

Answer 36

Expresses all income statement items as a percentage of sales.

Question 37

Common Size Cash Flow Statement

Answer 37

Expresses each line item as a percentage of total cash inflows (outflows), or as a percentage of net revenue.

Question 38

Horizontal Common Size Financial Statement Analysis

Answer 38

Expresses each line item relative to its value in a common base period.