quiz ratios

Question 1

Debt Ratio
Formula

Answer 1

Total Liabilities / Total Assets

Question 2

Equity Ratio
Formula

Answer 2

Total Equity / Total Assets

Question 3

Debt to Equity Ratio
Formula

Answer 3

Total Liabilities / Total Equity

Question 4

Times Interest Earned
Formula

Answer 4

Operating Income / Interest Expens

Question 5

Gross Profit Margin
Formula

Answer 5

Gross Profit / Net Sales x 100

Question 6

Operating Profit Margin
Formula

Answer 6

Operating Income / Net Sale

Question 7

Net Profit Margin
Formula

Answer 7

Net Income / Net Sales

Question 8

Return on Assets
Formula

Answer 8

Net Income / Average Total Assets (Assets are the beginning of the year + Assets at the end of the year / 2)

Question 9

current ratio Formula

Answer 9

Current Assets/ current liabilities

Question 10

Acid Test Ratio Formula

Answer 10

Quick Assets* / Current liabilities

*quick assets= Cash + Receivables + trading + securities

Question 11

Receivables Turnover Formula

Answer 11

Net Credit Sales / Average Trade Receivables*

*BEG. Trade receivables + End. Receivables / 2

Question 12

Average Collection Period Formula

Answer 12

365 days/ Receivable Turnover

Question 13

Inventory Turnover Formula

Answer 13

Cost of goods sold (COGS) / Average Inventory*

Beg. Inventory + End. Inventory / 2

Question 14

Average Sales Period Formula

Answer 14

365 days / Inventory turn over

Question 15

Working Capital Formula

Answer 15

Current Asset - Current Liabilities

Question 16

Ability of Company to settle it’s current obligations as they fall due

Answer 16

Liquidity Ratio

Question 17

Measures the ability of the Business to pay it’s short term Obligation as they fall due

Answer 17

Current Ratio

Question 18

Measures Immediate Liquidity with the ability to pay current liabilities with the most liquid assets

Answer 18

Acid Test Ratio

Question 19

Measures the efficiency to collect the amount due from credit customers

Answer 19

Receivables Turnover

Question 20

Approximate number of days it takes a business to collect its receivables from credit on account

Answer 20

Average Collection Period

Question 21

Measures the number of times the company was able to sell its entire inventory to customers during the year

Answer 21

Inventory Turnover

Question 22

the average times to convert inventory to sales

Answer 22

Average Sales period

Question 23

Measures the short term liquidity of a company

Answer 23

Working Capital

Question 24

Measure a company’s overall efficiency and performance base on its ability to generate profit

Answer 24

Profitability Ratio

Question 25

Measures the percentage of income earned after deducting cost of goods sold

Answer 25

Gross profit margin

Question 26

Measures the percentage of income earned after deducting the cost of sales and operating expense

Answer 26

Operating profit margin

Question 27

Measures the percentage of net income earned from net sales

Answer 27

Net profit margin

Question 28

Measures company’s efficiency in using it’s level of investment in assets in order to generate income

Answer 28

Return on Assets

Question 29

• also called leverage ratio

-ability to pay maturing long term debt while sustaining operation indefinitely

-company can pay obligations when they mature and stay financially stable

Answer 29

Solvency Ratio

Question 30

the company’s ability to pay the interest charged to the company for it’s outstanding liabilities

Answer 30

Times interest earned

Question 31

Measures the financing provided by creditors against the owner’s equity

Answer 31

Debt to equity ratio

Question 32

Percentage of total assets funded by owner’s equity

Answer 32

Equity Ratio

Question 33

How much of the assets is funded by the liabilities

Answer 33

Debt Ratio