Ratios

Question 1

Profit Margin

Answer 1

NI/Net sales

Question 2

Working Capital

Working Capital Ratio

Answer 2

=CA - CL

=CA/CL

Question 3

Quick Ratio

aka - Acid Test

Answer 3

=(Cash+A/R+marketable securities)/CL

Question 4

Times Interest Earned

Answer 4

=(NI + Interest + Income Tax)/Interest Expense

Question 5

A/R Turnover
# of Days to Collect Receivables

Answer 5

=Net Credit Sales/Avg. A/R

=365/A/R turnover

Question 6

Inventory Turnover
# of Days in Inventory

Answer 6

=COGS/Avg. Inventory

=365/Inventory Turnover

Question 7

Cash Availability Ratio or

Defensive Interval Ratio

Answer 7

=(Cash+A/R+marketable securities)/Avg. Daily cash expenditures

Question 8

Operating Cycle Length

Answer 8

=Days Sales in A/R+Days supply in inventory

Question 9

ROA

Answer 9

=(net income + after-tax interest expense)/average total assets

Question 10

ROE

Answer 10

=(NI-pref div)/Avg Common Shares

Question 11

EPS

Answer 11

=(NI-Pref Divd)/Weighted Avg Shares Outstanding

Question 12

P/E

Answer 12

=mkt Price/EPS

Question 13

Leverage ratios

Answer 13

=L/E
=E/A
=L/A

Question 14

BV

Answer 14

=owners equity/total shares outstanding

Question 15

Div payout ratio

Answer 15

= Cash dividends/NI to shareholders

Total or per share

Question 16

Debt ratio

Answer 16

Total Liabilities/Total Assets

Question 17

Stock yield

Answer 17

=dividend/price

Question 18

Owners Equity Ratio

Answer 18

=Shareholders Eq/Total Assets

Question 19

Debt to Equity

Answer 19

= Total Debt/Shareholders Equity