Ratio Formulas Flashcards
Current ratio
Current assets
/ current liabilities = 1.6:1
Acid-test ratio
Cash + short term investments + accounts receivable
/ current liabilities
1.6:1
Acid-test ratio
Receivables turnover
Net credit sales
/ average gross accounts receivable
= ___ times
Collection period
Days in year
/ receivables turnover
= __ days
Collection period
Inventory turnover
cost of goods sold
/ average inventory
= ___times
Inventory turnover
Days sales in inventory
Days in year
/ inventory turnover
= ___ days
Operating cycle
Days sales in inventory + collection period
= ___ days
Gross profit (not the gross profit margin)
Net sales - cost of goods sold = gross profit
Gross profit margin
Gross profit
/ net sales
= ____ %
Gross profit margin
Profit margin
Profit
/ net sales
= ____%
Profit Margin
Asset turnover
Net sales
/ average total assets
= ________ times
Asset turnover
Return on assets
Profit
/ average total assets
= ____%
Return on assets
Return on equity
Profit
/ average shareholders equity
= ______%
Return on equity
Earnings per share
Applicable for common shares.
Calculated as profit/ outstanding shares of its common stock.
Profit - preferred dividends
/ weighted average number of common shares OR end-of-period common shares outstanding
= $____
Price earnings
Market price per share
/ earnings per share
= ___ times
Price earnings
