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CMA Part 2 > Ratios > Flashcards

Ratios Flashcards

0
Q

Cash Ratio

A

(Cash and Equivalents + Marketable securities)
_____________________
Current Liabilities

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1
Q

Quick Ratio (Acid Test)

A

(Cash and equivalents + Marketable securities + Net Receivables)
_____________________
Current Liabilities

*Inventory & Prepaids are not considered in CA

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2
Q

Cash Flow Ratio

A

Cash flow from operations
_____________________
Current Liabilities

  • Cash Flow from operation = Operating Cash Flow
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3
Q

Net Working Capital Ratio

A

(Current Assets - Current Liabilities)
___________________
Total Assets

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4
Q

Liquidity Index

A

(Accounts receivable x Days sales in receivables) + (Inventory x Days sales in inventory)
_______________
Cash + Accounts receivable + Inventory

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5
Q

Accounts Receivable Turnover

A

Net credit sales
_______________
Average trade receivables (net)

  • Net meaning net off allowances for bad debt
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6
Q

Inventory Turnover

A

Cost of goods sold
_______________
Average inventory

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7
Q

Accounts Payable Turnover

A

Purchases
___________________
Average accounts payable

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8
Q

To Convert COG Manufactured to COG Sold

A

Opening Inventory + Purchases or COGM - Closing Inventory = COGS

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9
Q

Days Sales Outstanding (DSO) in receivables (Average Collection period)

A

365
_______________
Accounts receivable turnover

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10
Q

Days Sales in Inventory

A

365
______________
Inventory turnover

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11
Q

Days Purchases in Accounts Payable (DPO)

A

365
_______________
Accounts payable turnover

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12
Q

Fixed Assets Turnover

A

Net Sales
_______________
Average Net Fixed Assets

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13
Q

Total Assets Turnover

A

Net Sales
_______________
Average Total Assets

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14
Q

Liquidity Index

A

[(A/R * DSO) + (Inventory * Days Sales in Inventory)]
_______________
(Cash + AR + inventory)

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15
Q

Times-interest-earned Ratio

A

EBIT
______________
Interest expense

An income statement approach to evaluation a firm’s ongoing ability to meet the interest payments on its debt obligations.

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16
Q

Debt -to-Total Assets Ratio (Debt Ratio)

A

Total Debts
____________
Total Assets

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17
Q

Long-term Debt -to- Equity Capital Ratio (Debt to Equity)

A

Long Term Debt
_____________
Equity

  • Long Term Debt = Total Debt - Current Liabilities
18
Q

Debt -to- Equity Ratio

A

Total Debt
____________
Equity

19
Q

Total Debt -to- Total Capital Ratio

A

Total Debt
_________
Total Capital

20
Q

Financial Leverage

A

Assets
________
Equity

 OR

% ∆ in Net income
____________
% ∆ in EBIT

21
Q

Operating Leverage

A

Sales
_____

EBIT

 OR

% ∆ EBIT
_________
% ∆ in Sales

22
Q

Residual Income

A

ROI - imputed return on investment

23
Q

Book Value Per Share

A

Total Equity - Preferred Equity
______________________
No. of Common Shares outstanding

24
Q

Sustainable Equity Growth Rate

A

Return on Common Equity * (1 - Divident payout ratio)

25
Q

Dividend Yield

A

Dividend per Share
_______________
Market Price per Share

26
Q

Dividend Payout Ratio

A

Dividends to Common Shareholders
________________
Income available to Common Shareholders

27
Q

Earnings Yield

A

Earnings per Share
______________
Market Price per Share

28
Q

Basic Earnings Per Share (BEPS)

A

Net Income - Preferred Dividend
_______________
Weighted Average Number of Common Shares Outstanding

29
Q

Price/EBITDA Ratio

A

Market Price Per Share
__________
EBITDA

30
Q

Price/Earnings Ratio

A

Market Price Per Share
_____________
Earnings Per Share

31
Q

Market/Book Ratio

A

Market Price Per Share
______________
Book Value Per Share

32
Q

Net Profit Margin

A

Net Income
_________
Net Sales

33
Q

Operating Profit Margin

A

Operating Income
_________
Net Sales

34
Q

Gross Profit Margin

A

Gross Profit
________
Net Sales

35
Q

Return on Assets ( ROA )

A

Net Income
_______________
Average Total Assets

36
Q

Return on Investment ( ROI )

A

Net Income
__________
Total Assets

37
Q

Return on Equity (ROE)

A

Net Income
___________
Average Total Equity

38
Q

Return on Common Equity (ROCE)

A

(Net Income - Preferred Dividends)
____________
Average Common Equity Shares Outstanding

39
Q

DuPont Model

A

ROA = Net Profit margin * Total Asset Turnover

OR

ROA = Net Income/Avg Total Assets = Net Income/Sales * Sales / Avg Total Assets

40
Q

Diluted EPS

A

Net Income - Preferred Dividend + Preferred Div for Converted Shares + Tax Saving on Interest on Converted Bonds
____________
Diluted Weighted Avg no. of Common Shares

41
Q

What is the relation between ROE and Total Assets

A 
ROE = Du Pont ROI x Leverage
ROE = Net Income / Sales x Sales/Avg Assets x Assets / Equity

All being equal ROE will decrease as Total Assets increases

42
Q

What is the relation between ROE and Total Assets

A 
ROE = Du Pont ROI x Leverage
ROE = Net Income / Sales x Sales/Avg Assets x Assets / Equity

All being equal ROE will decrease as Total Assets increases

CMA Part 2 (6 decks)

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