Ratios Flashcards
Current Ratio
Current assets / Current liabilities
Quick (Acid Test) Ratio
Current assets - Inventory / Current liabilities
Receivables Turnover
Net credit sales / Average net receivables
Days’ Sales in Receivables
365,360, or 300 / Receivables Turnover
360 (Banker’s year)
300 (Number of business days)
Days’ Sales in Inventory
Average inventory / (COGS/365) or
365,360, or 300 / Inventory Turnover
Total asset turnover
Net sales / Avg. Total assets
Debt-to-equity Ratio
Total debt / Total equity
Times Interest Earned
Net income + Interest expense + Income tax expense / Interest expense
COGS Ratio
COGS / Net sales
Gross Margin Percentage
Net Sales - COGS / Net sales -OR-
Gross profit margin / Net sales
Net Operating Margin Percentage
Operating income / Net sales
Return on Equity
Net income / Total equity
Working Capital
Current Assets - Current Liabilities
Cash Ratio
Cash equivalents + Marketable securities / Current liabilities
AR Turnover in days
Average net receivables / (Net credit sales/365) or
365 / Receivable turnover
Inventory turnover
COGS / Average inventory
Operating cycle
AR turnover in days + Inventory turn over in days
Working capital turnover
Sales / Average working capital
AP Turnover
COGS / Average AP
Days in AP
Avg AP / (COGS/365)
Net profit margin
Net income / Net sales
Return on Total Assets
Net income / Average total assets -OR-
Net income/Net Sales * Net sales / Avg total sales (Net profit margin * Total asset turnover)
Return on Investment
Net income + Interest Expense (1-Tax Rate) / Avg (Long term liabilities + Equity)
Return on Common Equity
Net income - Preferred dividends / Avg common equity
Operating cash flow per share
Operating cash flow / Common shares outstanding
Operating Cash flows
EBIT + Depreciation - Taxes
Earnings Before Interest & Taxes
Degree of financial leverage
EBIT / EBT -OR-
Earnings before interest & taxes / Earnings before taxes
EPS (Earnings per Share)
Net Income - Preferred dividends / Weighted average # of common shares outstanding
Price / earnings Ratio
Market price per share / Diluted earnings per share
Dividend Payout Ratio
Dividends per common share / Diluted earnings per share
Dividend yield
Dividends per common share / Market price common share
Book value per share
Total stockholders’ equity - Preferred stock / # of common shares outstanding
Debt ratio
Total liabilities / Total assets
Operating cash flow to Total debt
Operating cash flow / Total debt
