Ratios Flashcards
1
Q
Calculate Return on Equity
A
(Net Income)/ ((Year 1 SE + Year 2 SE)/2)
2
Q
Calculate Return on Assets
A
Net Income/ ((Year 1 Assets + Year 2 Assets)/2)
3
Q
Profit Margin
A
Net Income/ Total Revenue (Net Sales)
4
Q
Working Capital
A
Current Assets - Current Liabilities
*the greater the working capital- the more likely the firm can pay their bills on time
5
Q
Current Ratio
A
Current Assets/ Current Liabilities
*Want to have assets exceed liabilities
6
Q
Inventory Turnover
A
COGS/Average inventory for the year
7
Q
Debt to Equity Ratio
A
Total Liabilities/Total SE
8
Q
Gross Margin
A
Revenue - COGS
