Ratio Anaylsis

Question 1

Working Capital

Answer 1

Current assets- Current liabilities

Question 2

Current Ratio

Answer 2

Current Assets
/
Current liabilities

Question 3

Quick (acid test) ratio

Answer 3

Cash + Marketable securities + AR
/
Current liabilities

OR
(Current assets- Inventory- prepayments)
/
Current liabilities

Question 4

Receivable Turnover

Answer 4

Net credit sales
/
Avg. Accounts Receivable

Question 5

Receivable collection period

Answer 5

365
/
Accounts receivable turnover ratio

or

365 * Ending A/R
/
Credit sales

Question 6

Inventory Turnover

Answer 6

Cost of good sold
/
Avg. inventory

Question 7

Inventory conversion period

Answer 7

365
/
Inventory Turnover Ratio

Question 8

Payables Turnover

Answer 8

Credit Purchases
/
Avg. Accounts Payable

Question 9

Payable deferral period

Answer 9

365
/
Accounts payable turnover ratio

or

365 * Ending Accounts payable
/
credit purchases

Question 10

Operating cycle

Answer 10

Inventory conversion period + Receivable collection period

Question 11

Cash Cycle

Answer 11

Inventory conversion period + Receivable collection period - payable deferral period

Operating Cycle- Payable Deferral period

Question 12

Fixed Asset turnover

Answer 12

Net sales
/
Avg. net fixed assets

Question 13

Gross margin

Answer 13

Gross profit
/
sales

Question 14

Operating profit margin

Answer 14

Operating profit
/
sales

Question 15

Net profit margin

Answer 15

Net profit
/
sales

Question 16

Return on Investment

Answer 16

Net income
/
Avg. Net assets

Average net assets= (Total assets- current liability) or ( non-current liability +equity)

Question 17

Return on Assets

Answer 17

Net income
/
Avg. total assets

Question 18

Return on equity

Answer 18

Net income
/
Avg. common stockholders equity

Question 19

debt to total assets

Answer 19

Total liabilities
/
total assets

Question 20

Debt to equity ratio

Answer 20

Total liabilities
/
Total Stockholders equity

Question 21

Time interest earned ratio (interest coverage ratio)

Answer 21

Earnings before interest & taxes (EBIT)
/
Interest expense

Question 22

Equity multiplier

Answer 22

Assets
/
equity

Question 23

Price/ earnings (PE) ratio

Answer 23

Common stock price per share
/
Earnings per share

Question 24

Book Value per share

Answer 24

Common stock equity
/
Common stock shared outstanding

Question 25

Common stock equity

Answer 25

Stockholders equity- preferred stock liquidation value (dividends in arrears if its cumulative)

Question 26

Market capitalization

Answer 26

Common stock price per share * Common stock shares outstanding

Question 27

Market/ book ratio (PB Ratio)

Answer 27

Common stock price per share
/
Book value per share

or

Market Capitalization
/
common stock equity