ratio Flashcards
expresses the relationship among selected items of financial statement data.
Ratio analysis
is composed of a numerator and a denominator.
financial ratio
ratio categories
liquidity
profitability
solvency
measure the ability of an entity to pay currently maturing obligations and meet unexpected cash needs.
. Liquidity ratios
total current assets
%
total current liabilities
current ratio
cash + receivables
%
total current liabilities
quick ratio
measures the ability of an entity to earn income over a period of time.
. Profitability ratios
ratios in liquidity
current ratio
quick ratio
ratios in profitability
gross profit ratio
net profit ratio
operating ratio
gross profit
%
net sales
gross profit ratio
net income
%
net sales
net profit ratio
cost of sales+operating expense
%
net sales
operating ratio
measure the ability of an entity to survive over along period of time.
Solvency ratios
ratios in solvency
debt to equity ratio
proprietary ratio
total liabilities
%
total owners equity
debt to equity ratio
