ratios

Question 1

current ratios

Answer 1

liquidity measure
current assets/current liabilities

Question 2

price - earnings ratio

Answer 2

market value price/company’s earnings per share
one profitability ratio

Question 3

solvency ratio

Answer 3

determines long term survivability
total liabilities/total assets = %

Question 4

Basic earnings per share (EPS) ratio

Answer 4

income to common shareholders/#of common shares
one profitability rstio

Question 5

gross profit margin

Answer 5

net sales - cost of goods sold

Question 6

profit margin

Answer 6

how much sales rev exceeds cost
(gross profit/total revenue)x100

Question 7

dividend yield ratio

Answer 7

dividend per share/share price

Question 8

profitability ratio

Answer 8

operating success for period
NOT CALCULATED
P/E or EPS

Question 9

working capital equation

Answer 9

CA-CL

Question 10

gross profit margin equation

Answer 10

gross profit / sales

Question 11

profit margin equation

Answer 11

net income/sales

Question 12

gross profit equation

Answer 12

sales - COGS

Question 13

inventory turnover ratio equation

Answer 13

COGS/average inventory value
higher better
stuff being sold faster

Question 14

days in inventory ratio equation

Answer 14

365/inventory turnover
lower better

Question 15

receivable turnover ratio equation

Answer 15

credit sales/ avg gross AR
higher better, more liquid

Question 16

average collection period ratio equation

Answer 16

365 days/receivables turnover

Question 17

return on assets equation

Answer 17

net income/ avg total assets

Question 18

asset turnover ratio equation

Answer 18

sales/avg total assets