Ratios

Question 1

Receivable Turnover

Answer 1

Net credit sales / Average AR

Question 2

Working Capital

Answer 2

Current assets - Current liabilities

Question 3

Current Ratio (working capital ratio)

Answer 3

Current assets / Current liabilities

Question 4

Quick Ratio (Acid test)

Answer 4

Current assets - inventory & prepaids / Current liabilities

Question 5

Inventory turnover

Answer 5

COGS / Average inventory

Question 6

Price/Earnings ratio

Answer 6

Market price / EPS

Question 7

Average days sales in inventory

Answer 7

360 / Inventory turnover

Question 8

Average collection period

Answer 8

365 X Average AR / Credit Sales

Question 9

Return on Investment (Asset)

Answer 9

NI / Average investment (Asset)

Question 10

Debt to Equity Ratio

Answer 10

Total Liabilities / Shareholders Equity

Question 11

Interest Coverage Ratio

Answer 11

Earnings before interest & taxes / interest expense

Question 12

Acctg rate of return

Answer 12

Avg incremental income (after tax) / initial avg estimate

Question 13

Net profit margin

Answer 13

NI / Revenue

Question 14

Times Interest Earned

Answer 14

NI + Interest Exp + Income Tax Exp / Interest Exp

Question 15

Gross Margin

Answer 15

Revenue - COGS

Question 16

EBITDA Margin

Answer 16

EBITDA / Revenue

Question 17

Average days to collect AR

Answer 17

365 / AR Turnover