Ratios Flashcards
Current ratio:
Current asset / Current Liabilities
The current ratio measures the ability of a company to cover its short-term liabilities with its current assets.. Measures liquidity
Quick Ratio (acid test)
Current Liabilities
The quick ratio is an indicator of a company’s short-term liquidity position and measures a company’s ability to meet its short-term obligations with its most liquid Assets
Inventory turnover
COGS / Average Inventory
Inventory turnover is a ratio showing how many times a company has sold and replaced inventory during a given period.
Receivables Turnover
Net Credit Sales / Average Receivables
Accounts receivable turnover is the number of times per year that a business collects its average accounts receivable. The ratio is intended to evaluate the ability of a company to efficiently issue credit to its customers and collect funds from them in a timely manner.
Cash from Op Activities to Current Liabilities
Net Cash by Op Activity / Current Liabilities
Shows extent to which a company has covered its current liabilities by generating cash from normal operations
Total Asset Turnover
Net Sales / Average Total Assets
Measures how efficiently assets are used to produce sales
Rate of Return on Total Assets
Net Income / Average Total Assets
Measures the productivity of assets in terms of producing income
Return on ncommon stockholders equity
Average common stockholders equity
Measures return to common stockholders
Debt Ratio
Total Liability / Total Asset
Leverage used and creditor protection in case of solvency
Debt Equity
Total Liability / Total Equity
Determines the equity’s long-term-debt paying ability
Equity Ratio
Total Equity / Total Asset
Measures total asset investment provided by stockholders
Times interest earned
Interest Expense
Measures ability to cover interest charges
Price earnings ratio
Market price per common share / EPS
Indicates relationship of common stock to net earnings
Dividend Yield
Dividend per common share / Market price per common share
Shows return to stockholders based on current market price of stock
Profit margin on sales
Net income / sales
Measures efficiency of earning income from sales
