Ratios Flashcards
1
Q
Liquidity- Current ratio
A
(current assets/current liabilities) 2:1
2
Q
Gearing(solvency) - Debt to equity ratio
A
(total liabilities/total equity) 0.5-0.7:1
3
Q
Profitability - Gross Profit Ratio
A
(gross profit/sales) 50%
4
Q
Efficiency - Expense ratio
A
(total expenses/sales) LOWER is better
5
Q
Profitability - Net profit ratio
A
(net profit/sales) HIGHER is better
6
Q
Profitability - Return on equity ratio
A
(net profit/total equity) 11-18%
7
Q
Efficiency - Accounts receivable turnover ratio
A
(sales/accounts receivable) 30 days
