ratios Flashcards
Gross profit margin ratio
Net sales - COGS / Net sales
shows margin revenue above COGS
Accounts receivables turnover
Net credit sales / Average Acc. receiv.
determines how often acc rec are collected
Avg Accounts receivables
begin. acc rec + end. acc rec / 2
Number of days’ sales in receivables
365 / acc. receivables turnover
shows expexted days to turn acc rec into cash
Net Purchases
Gross purchases - Purchase discounts - Purchase returns & allowances
Net Sales
Gross sales - Sales discount - Sales returns & allowances
COGS
beginning inv. + Net purchases - ending inv.
Gross margin
Net sales - COGS
Income from operations
Gross margin - Operating expenses
Net realizable value
acc receiv. - allowances for doubtful accounts
Inventory turnover ratio
COGS / Avg. inv
measures the number of times an avg quantity of inventory was bought/sold
Number of days’ sales in inventory
Avg. merch. inv / Avg. daily COGS
how many days it would take to clear remaining inventory
Avg. daily COGS
COGS / 365
Fixed Asset turnover
Net sales / Avg. net Fixed assets
sales generated by each dollar of fixed assets
Total goods available for sale
begin. inv + purchases
goodwill
paid price - book value of net assets
straight line depreciation
(acquisition cost - salvage value) / useful life
units of production depreciation
depreciable base / usage
double declining balance
2 × 100 / useful life x book value
depletion cost per unit
total cost - residual value / estimated units
interest
principal × interest rate × period of time
Debt to equity ratio
Total debt / Total equity
measures portion of debt used by a company relative to stockholders equity
Earnings per share EPS
Net income - Preferred dividends /
Weighted avg. com. shares outst.
portuon of corporations profit allocated to each outstanding share of common stock
quote
current market price /
maturity value × 100
interes payment
stated rate × face value
interest expense
market rate × carrying value
Amortization of a loan
date, beginning balance, payment, to interest, to principal, ending balance
Amortization of a bond payable at discount
date, interest expense, interest payment, amortization, discount bal, bonds payable, book value
Amortization of a bond at premium straight line
date, bonds payable, premium bal, amortization, book value
Amortization of a bond payable on premium
date, interest payment, interest expense, amortization, premium balance, bonds payable, book value
working capital
current assets - current liabilities
(what is left after current liabilities are covered)
current ratio
current assets / current liabilities
proportion
quick ratio
Cash + Short term investment + Ac rec / Current liabilities
interest earned
Earnings before interest and taxes / Interest expense
ability to pay interest
total asset turnover
Net sales / Average total assets
ability to use assets to make revenue
profit margin
Net income / Net sales
how much of sales revenue has turned into income
return on total assets
Net income / Avg total assets
ability to use assets to make profit
return on equity
Net income / Avg equity
ability to use invested capital to make income
