FS Flashcards
measures the number of times inventory is sold during a period.
Inventory Turnover
also known as inventory conversion period and days’ s
Average Age of Inventory
shows the number of times accounts payable is fully paid during a period.
Accounts Payable Turnover
is the length of time from the receipt of goods from the supplier up to the time these goods are sold to customers and the collections of those receivables.
Normal Operating Cycle
also known as payable deferral period and days purchases in payables indicates the length of time before a company’s payable is fully paid.
Average Age of Payables
refers to how much of company’s resources are financed by debt and/or preferred equity, both of which require fixed payment of interests and dividends.
Leverage
refers to the ability of company to pay its debts.
Solvency Ratios
is the ratio of assets provided by the creditors to total assets derived from all sources.
Debt Ratio
is the ratio of assets generated by financing from the creditors to the assets provided by the owners.
Debt-Equity Ratio
determines the ability of the firm to pay its interest expense from income derived from its operation.
Times Interest Earned
is the ratio of assets provided by the owners to total assets.
Equity Ratio
shows the percentage of a firm’s profit in relation to its total assets. It also shows the efficiency of the firm in using its assets.
Return on Assets
shows the percentage of profit in relation to its sales.
Return on Sales
measures the amount of net income earned by each ordinary share.
Earnings per share
measures the amount earned on the owners’ or stockholders’ investment.
Return on Equity
