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FAR > Ratios > Flashcards

Ratios Flashcards

1
Q

Liquidity Ratios

A
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2
Q

What action increases the quick ratio

A

Selling inventory at a loss

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3
Q

Net credit sales formula

A
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4
Q

AR Turnover and AVG AR

A
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5
Q

Days Sales in AR

A
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6
Q

Asset Turnover

A
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7
Q

ROA : Return on assets

A

Net income / AVG Total Assets
or
Asset Turnover x Profit Margin

Asset Turnover = AVG Total Assets / NetSales

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8
Q

Which costing method results in a lower inventory turnover in an inflationary economy?

A

FIFO = lower turnover

LIFO = higher turnover

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9
Q

Dividend Pay out ratio

A

Cash dividends / Net income

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10
Q

ROA

A

Asset Turnover = Net Sales / AVG Total Assets

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11
Q

TIE - Times interest earned ratio

A
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12
Q

Payout ratio, DPS, EPS

A
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13
Q

Inventory Turnover Ratio and Average Inventory

A
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14
Q

ICP or Average Days Sales in Inventory

A
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15
Q

Debt-to-equity (D/E) ratio

A
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16
Q

Price to Earnings Ratio & Basic EPS

A
17
Q

Return on Sales

A

Operating Income / Revenue

18
Q

What indicates successful use of leverage?

A

When the rate of return on investments exceeds the cost of debt.

19
Q

ROE
(Return on common stockholders equity)

A

avg cs equity = (beg comms + RE + end comms + RE) / 2

20
Q

Which of the following is not a profitability ratio? Return on Assets, Gross Margin, Operating Profit Margin, Price/Earnings (P/E)

A

P/E is a market ratio, not a profitability ratio. It reflects how much investors are willing to pay for each dollar of a company’s earnings.

Profitability ratios:
Return on Assets (ROA)
Gross Margin,
Operating Profit Margin

21
Q

What is the formula for Book Value Per Share?

A
22
Q

Operating profit margin

A
23
Q

Which ratios are used to derive Return on Investment (ROI)?

A
24
Q

Operating cycle

A
25
Q

COGS Formula

A

COGS = Beg Inventory + Purchases − End Inventory

26
Q

All Turnovers

A
27
Q

All Days Formulas

A

FAR (23 decks)

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