quiz ratios Flashcards
Debt Ratio
Formula
Total Liabilities / Total Assets
Equity Ratio
Formula
Total Equity / Total Assets
Debt to Equity Ratio
Formula
Total Liabilities / Total Equity
Times Interest Earned
Formula
Operating Income / Interest Expens
Gross Profit Margin
Formula
Gross Profit / Net Sales x 100
Operating Profit Margin
Formula
Operating Income / Net Sale
Net Profit Margin
Formula
Net Income / Net Sales
Return on Assets
Formula
Net Income / Average Total Assets (Assets are the beginning of the year + Assets at the end of the year / 2)
current ratio Formula
Current Assets/ current liabilities
Acid Test Ratio Formula
Quick Assets* / Current liabilities
*quick assets= Cash + Receivables + trading + securities
Receivables Turnover Formula
Net Credit Sales / Average Trade Receivables*
*BEG. Trade receivables + End. Receivables / 2
Average Collection Period Formula
365 days/ Receivable Turnover
Inventory Turnover Formula
Cost of goods sold (COGS) / Average Inventory*
Beg. Inventory + End. Inventory / 2
Average Sales Period Formula
365 days / Inventory turn over
Working Capital Formula
Current Asset - Current Liabilities
Ability of Company to settle it’s current obligations as they fall due
Liquidity Ratio
Measures the ability of the Business to pay it’s short term Obligation as they fall due
Current Ratio
Measures Immediate Liquidity with the ability to pay current liabilities with the most liquid assets
Acid Test Ratio
Measures the efficiency to collect the amount due from credit customers
Receivables Turnover
Approximate number of days it takes a business to collect its receivables from credit on account
Average Collection Period
Measures the number of times the company was able to sell its entire inventory to customers during the year
Inventory Turnover
the average times to convert inventory to sales
Average Sales period
Measures the short term liquidity of a company
Working Capital
Measure a company’s overall efficiency and performance base on its ability to generate profit
Profitability Ratio
