Ratios

Question 0

Current Ratio

Answer 0

CA / CL

Question 1

Working capital formula?

Answer 1

CA - CL

Question 2

Quick Ratio

Answer 2

(Cash+ Mktble + A/R) / CL

Question 3

Quick Ratio 2

Answer 3

(CA - Inv - Prepaid Exp) / CL

Question 4

Cash Ratio

Answer 4

(Cash + Mktble) / CL

Question 5

Cash Flow Ratio?

Answer 5

Operating Cash Flow / CL

Question 6

What are liquidity ratios?

Answer 6

Current Ratio
Quick Ratio
Cash Ratio
Cash Flow Ratio

Question 7

What are Activity ratios?

Answer 7

Receivables Turnover

Inventory Turnover

Question 8

Receivables turnover ratio?

Answer 8

Net Credit Sales / Average Net Receivables

{ net = deduct any Allowances for Uncollectibles }

Question 9

Inventory Turn over ratio?

Answer 9

COGS / Average Inventory

Question 10

Total Asset Turnover Ratio?

Answer 10

Sales / Average Total Assets

Question 11

Fixed Asset Turnover Ratio?

Answer 11

Sales / Average Net PP&E

Question 12

What are Solvency Ratios?

Answer 12

Debt to Equity ratios
Times Interest Earned
Debt to Asset ratio

Question 13

Cash Conversion Cycle (CCC) formula?

Answer 13

CCC= ICP + RCP - PDP

Question 14

ICP?

Answer 14

Avg Inventory / COGS per Day
Or
360 ( or 365 ) / Inv turnover ratio

Question 15

Average Inventory calculation?

Answer 15

( Beg Inv + Ending Inv ) / 2

Question 16

RCP ( Receivable Collection Period) = ?

Answer 16

RCP = Avg Receivables / credit sales per day

Or

360 ( or 365 ) / Receivables Turnover Ratio

Question 17

PDP ( A/P Deferal Period ) ?

Answer 17

PDP = Avg Payables / Credit Purchases per Day

Or

365 ( or 360) / Payables Turnover Ratio

Question 18

If the ratio is >1, then a increase in Num and Denom will…?

Answer 18

Decrease the ratio

Question 19

Operating leverage means?

Answer 19

Existence of fixed Opex

Question 20

Financial leverage means?

Answer 20

Raising capital through debt than equity.

Question 21

Financial leverage ratio formula?

Answer 21

Financial Levearge = Assets / Equity

Assets = Liab + Equity

Question 22

In Financial leverage ratio, a ratio > 2 implies?

Answer 22

Liabilities > equity

Question 23

If Leverage < 2 indicates?

Answer 23

Liability < Equity

Question 24

Debt To Total Asset ratio?

Answer 24

Total Debt / Total Assets

Question 25

Debt to Equity ratio?

Answer 25

Total Debt / Total Equity

Question 26

Debt to Total Capital ratio ?

Answer 26

(CL + LTL) / Total Debt + Total Equity

Question 27

Long term Debt to equity?

Answer 27

Total Debt - CL / Equity

Question 28

Times Int Earned?

Answer 28

EBIT / Interest Expenses

Question 29

Fixed charge Coverage ratio?

Answer 29

(EB fixed charges and taxes) / Fixed charges

Question 30

Cash flow to Fixed charge

Answer 30

(Cash flow from Op + Fixed charge + tax payment) / fixed charges

Question 31

If Operating Leverage is high, greater the effects changes in Sales Revenue have on ….?

Answer 31

Operating Income

Question 32

Higher Debt-Equity ratio means, higher chance of …..?

Answer 32

Bankruptcy

Question 33

Lower debt-equity ratio means, company is less reliant on…?

Answer 33

Debt

Question 34

Lower Debt to Total Assets ratio indicates ?

Answer 34

Co has enough assets to cover long-term obligations