Ratios Flashcards
D/E Ratio (measure of financial leverage)
total liabilities/owners’ equity
Times Interest Earned Ratio (ability to meet interest obligations)
[Net income + Interest expense + Tax expense]/ Interest expense
Receivables Turnover Ratio (ability to collect cash)
total credit sales - discount - returns - allowance/Average Accounts Receivable
Average collection period
365/Receivables turnover ratio
Inventory turnover ratio (ability to sell inventory)
COGS/Average Inventory
Average days in Inventory
365/Inventory turnover ratio
Current Ratio
Current Asset/Current liabilities
Acid-test ratio (quick ratio)
[Cash + Current investments + Accounts Receivable]/Current liabilities
Gross profit ratio (amount the sale of inv exceeds its cost)
Gross Profit/Net sales
Return on Assets (how effectively is the company using its assets)
Net income/average total assets
Profit Margin (how much profit is generated from sales)
Net Income/Net Sales
Asset turnover (is the co. effectively generating sales from its assets)
Net sales/Average total assets
Return on Equity (ability to generate earnings from the resources)
Net income/Average Owners’ Equity
Dividend Yield (how much dividends paid relative to its share price)
Dividend per share/stock price
Earnings per Share (net income per share)
[Net Income - Preferred Dividend]/Average Shares of common stock outstanding
Price/Earnings ratio (investor’s confidence level measure)
Stock Price/Earnings per Share
