Ratios

Question 1

Gross Profit

Answer 1

Sales - COGS

Question 2

Gross Profit Margin

Answer 2

Gross Profit / Net Sales

Question 3

Net Profit Margin

Answer 3

Net Income / Net Sales

Question 4

Return on Total Assets

Answer 4

(Net Income + Interest Expense after tax) / Average Total Assets

Question 5

Return on Owner’s Equity

Answer 5

Net Income / Average Stockholder’s Equity

Question 6

Return on Common Stockholder’s Equity

Answer 6

(Net Income - PS Dividend for the Period) / Average Common Stockholder’s Equity

Question 7

Required $ Return

Answer 7

Average Invested Capital x Hurdle Rate

Question 8

Residual Income

Answer 8

Net Income - Required $ Return

Question 9

Economic Value Added

Answer 9

Earning before Interest - [(Opportunity Cost) x (LT debt + SE)]

Question 10

What value can be used for “Opportunity Cost” in the EVA Equation?

Answer 10

Cost of Capital or Hurdle Rate

Question 11

Earnings per Share

Answer 11

(Net Income - PS Dividend obligation for current period) / Weighted Average Number of Shares

Question 12

Price-Earnings (PE) Ratio

Answer 12

Market Price of CS / EPS

Question 13

C/S Dividend Payout Rate - Total Basis

Answer 13

Cash Dividends to CS / Net Income to CS

Question 14

C/S Dividend Payout Rate - Per Share Basis

Answer 14

Cash Dividends to CS / EPS

Question 15

Common Stock Yield

Answer 15

Dividend per CS / Market Price per CS

Question 16

Times Interest Earned

Answer 16

(Net Income + Interest + Taxes) / Interest Expense

Question 17

AP Turnover

Answer 17

Credit Purchases / Average AP

Question 18

Capital Turnover

Answer 18

Sales / Average Owner’s Equity

Question 19

Cash Conversion Cycle

Answer 19

AR + INV - AP

Question 20

DuPont ROI

Answer 20

ROS x Asset Turnover