Ratios

Question 1

Liquidity:

CURRENT RATIO

Answer 1

Current Assets / Current Liabilities

Question 2

QUICK RATIO

Answer 2

Current Assets -Inventory / Current Liabilities

Question 3

Inventory Turnover

Answer 3

Cost of goods Sold / Inventory

Question 4

Fixed Asset Turnover

Answer 4

Sales / Net Fixed Assets

Question 5

Total Asset Turnover

Answer 5

Sales / Total Assets

Question 6

Debt Ratio

Answer 6

Total Debt / Total Assets

Question 7

TIE Ratio

Answer 7

EBIT / Interest

Question 8

Gross Profit Margin

Answer 8

Gross Profit / Sales

Question 9

Net Profit Margin

Answer 9

Net Income / Sales

Question 10

ROA

Answer 10

Net Income / Total Assets

Question 11

ROE

Answer 11

Net Profit Margin x Total Asset Turnover x Total Assets To Equity
NPM = Net Income / Sales
TAT = Net Sales / Total Assets
FLM = Total Assets / Equity (FLM = Equity Multiplier)

ROE = Net Income / Equity

Question 12

Earnings per Share (EPS)

Answer 12

Net Income - Preference Shares / Equity

Question 13

Current Assets

Answer 13

(Current Assets - Inventory) / Current Liabilities

Question 14

Breakeven

Answer 14

Fixed Costs / (Unit Price - Unit Variable Costs)

Question 15

Days of Liquidity

Answer 15

(Quick Assets x 365 days) / Year’s Cash Expenses

Quick Assets = All Cash and Marketable Securities

Question 16

Margin of Safety Ratio

Answer 16

(Expected Sales -Breakeven Sales) / Breakeven Sales

Question 17

Return on Assets

Answer 17

Net Profit After Tax / Total Assets

Question 18

Asset Turnover

Answer 18

Sales / Fixed Assets

Question 19

Margin of Safety Ratio

Answer 19

(Expected Sales -Breakeven Sales) / Breakeven Sales