Ratios

Question 1

Current Ratio

Answer 1

Current assets / current liabilities

Question 2

Quick ratio

Answer 2

Quick assets / current liabilities

Question 3

Inventory turnover

Answer 3

cogs / average inventory

Question 4

days supply in inventory

Answer 4

365 / inventory turnover

Question 5

AR turnover

Answer 5

Net credit sales / average AR

Question 6

days sales in AR

Answer 6

365 / AR turnover

Question 7

total asset turnover

Answer 7

net sales / average total asset

Question 8

return on assets

Answer 8

(net income + AFTER TAX interest expense) / average total assets

Question 9

return on CS equity

Answer 9

(net income - preferred dividends)/average CS equity

Question 10

PE ratio

Answer 10

market price per CS / earnings per share

Question 11

dividend yield

Answer 11

dividend per CS/market price per CS

Question 12

Profit margin (also called profit margin on sales)

Answer 12

net income / sales

Question 13

debt to equity ratio

Answer 13

total liabilities / shareholders equity

Question 14

Equity ratio

Answer 14

total shareholders equity / total assets

Question 15

times interest earned

Answer 15

(net income + interest expense + income tax expense) / interest expense

Question 16

Gross margin percentage

Answer 16

(sales-cogs) / sales

Question 17

Margin on cost

Answer 17

(sales-cogs) / cogs

Question 18

Times preferred dividends earned ratio

Answer 18

net income / preferred stock dividends

Question 19

Dividend payout ratio

Answer 19

common dividends / net income

Question 20

Book value per P/S

Answer 20

(P/S equity + dividends in arrears) / # of outstanding P/S

Question 21

Book value per C/S

Answer 21

C/S equity / # of outstanding C/S

Question 22

Debt ratio (NOT the debt to equity ratio)

Answer 22

Total liabilities / Total assets

Question 23

Owners Equity Ratio

Answer 23

S/H equity / total assets

Question 24

C/S Yield

Answer 24

Dividend per C/S / Market price per C/S

Question 25

Earnings per share

Answer 25

(NI - P/S dividends) / Weighted average shares outstanding

Question 26

Return on Equity

Answer 26

NI / Average S/H equity

Question 27

Ending Inventory (at cost) =

Answer 27

Ending Inventory (at retail) * (Cost/retail ratio)

Question 28

Bonus calculation

Answer 28

Bonus = % * (Cash paid - Bonus)

Question 29

What is the equation to recognize gross profit for the percentage of completion method for contract revenues?

Answer 29

revenue = costs incurred to date / (costs incurred to date + estimated costs to complete)