Ratios Flashcards
Profit Margin
NI / Sales
Return on Assets (ROA)
NI / Total Assets
Return on Equity (ROE)
NI / Stockholder’s
Current Ratio (Should be 2 or higher)
Current assets / current liabilities
Quick ratio (Should be 1 or higher)
(Current Assets - Inventory) / currently liabilities
Net Working Capital (NWC)
Current Assets - current liabilities
Profit Margin is equal to
Return on Sales
Debt to Equity ratio
Total Liabilities (TL) / Stockholder’s Equity (SE)
Inventory Turnover
Sales/ Inventory
Receivables Turnover
Sales / Accounts Receivable (AR)
Fixed Asset Turnover
Sales / Fixed Assets (FA)
Total Asset Turnover
Sales / Total Assets (TA)
Leverage Ratio
Total Assets / Stockholder’s Equity
Also known as Equity multiplier
Coverage Ratio
Earnings Before Interest and Tax (EBIT) / Interest Expenses
Debt Ratio
Total Debt / Total Assets
