Ratios

Question 1

Liquidity Ratios (5)

Answer 1

Current Ratio
Quick Ratio
Average Collection Period
AR Turnover
Inventory Turnover

Question 2

Current Ratio

Answer 2

Current assets/ Current Liabilities

Question 3

Quick Ratio

Answer 3

(Current Assets - inventory)/Current Liabilities

Question 4

Average Collection Period

Answer 4

AR/Daily Credit Sales

Question 5

AR Turnover

Answer 5

Credit Sales / AR

Question 6

Inventory Turnover

Answer 6

Cogs/Inventory

Question 7

Efficiency Ratios (3)

Answer 7

Total Asset turnover
Fixed Asset Turnover
OIROI

Question 8

Total Asset Turnover

Answer 8

sales/total assets

Question 9

Fixed Asset Turnover

Answer 9

Sales/Fixed Assets

Question 10

Operating income Return on Investment

Answer 10

Operating Income/Total Assets

Question 11

Financing ratios (2)

Answer 11

Debt Ratios

Times Interest earned

Question 12

Debt Ratio

Answer 12

Total Debt / Total Assets

Question 13

Times interest Earned

Answer 13

EBIT / Interest Expense

Question 14

Profitability Ratios (5)

Answer 14

Return on Assets
Return on Equity
Gross Margin
Operating Margin
Net Margin

Question 15

Return on assets

Answer 15

NI/Total Assets

Question 16

Return on equity

Answer 16

NI/Total Equity

Question 17

Gross Margin

Answer 17

Gross profit / Sales

Question 18

Operating Margin

Answer 18

EBIT/Sales

Question 19

Net Margin

Answer 19

NI / Sales

Question 20

Dupont Decomposition

Answer 20

ROE = Net profit Margin x Asset Turnover x Leverage Multiplier

Question 21

Return on Invested Capital (ROIC)

Answer 21

NOPAT / Costly Capital

Question 22

Net Operating Profit After Taxes (NOPAT)

Answer 22

EBIT(1-t)

Question 23

Costly Capital

Answer 23

All Interest Bearing Debt + Total Equity

Question 24

Free Cash Flows to the Firm (FCFF)

Answer 24

EBIT - Cash Tax Payments + Deprectiation - Capex - Increases in NWC

Question 25

Cash Tax Payments

Answer 25

Total Tax Payments

Question 26

Depreciation

Answer 26

Depreciation from the income statement

Question 27

CAPEX (capital Expenditure)

Answer 27

Gross property plant and equipment changes from the balance sheet

Question 28

NWC (Net Working Capital)

Answer 28

Net Working Captal (current Assets - Current Liabilites) Changes from the two balance sheets

Question 29

Free Cash Flow to Equity Holders

Answer 29

net Income + Depreciation - CAPEX - Increase in NWC + Increase in Net Long Term Debt

Question 30

Economic Value Added (EVA)

Answer 30

NOPAT - [WACC x (Costly Capital)]

Question 31

WACC

Answer 31

Weighted average cost of capital