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Ratios MAF > RATIOS > Flashcards

RATIOS Flashcards

1
Q

ROE (return on equity)

A

NET INCOME/TOTAL EQUITY

How much profit each dollar of common stockholders’ equity generates

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2
Q

ROA (return on assets)

A

EBIT/TOTAL ASSETS

How effectively a company can earn a return on its investment in assets

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3
Q

ROCE (return on capital employed)

A

EBIT/ CAPITAL EMPLOYED

Capital Employed = Equity + Dib (interest-bearing liabilities)

How much profit each dollar of employed capital generates

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4
Q

Capital Employed

A

EQUITY + INTEREST BEARING LIABILITIES (Dib)

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5
Q

RONA (return on operating net assets)

A

OPERATING PROFIT/OPERATING NET ASSETS

Operating net assets = Capital Employed/ Financial Assets

Financial Assets = Cash & cash equivalents + marketable securities

How much profit each dollar of operating net assets generates

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6
Q

Operating net assets

A

Capital Employed/ Financial Assets

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7
Q

Financial Assets

A

Cash & cash equivalents + marketable securities

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8
Q

RECEIVABLES TURNOVER

A

SALES/AVERAGE RECEIVABLES

How many times a business can collect its average accounts receivable during the year

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9
Q

INVENTORY TURNOVER

A

COGS/AVERAGE INVENTORY

How many times a company sold its total average inventory during the year

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10
Q

PAYABLES TURNOVER

A

PURCHASES/AVERAGE TRADE PAYABLES

Purchases = Closing inventory - Opening Inventory + COGS

How many times a company can pay off its average accounts payable balance during the course of the year

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11
Q

Purchases

A

Closing inventory - Opening Inventory + COGS

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12
Q

TOA (ASSET TURNOVER)

A

SALES/ AVERAGE TOTAL ASSETS

How many sales are generated from each dollar of the company’s assets

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13
Q

WORKING CAPITAL TURNOVER

A

SALES/AVERAGE WORKING CAPITAL

Working Capital = Current Assets - Current Liabilities

How many sales are generated from each dollar of company working capital

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14
Q

Working Capital

A

Current Assets - Current Liabilities

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15
Q

EQUITY RATIO

A

TOTAL EQUITY/TOTAL ASSETS

How much of the total company assets are financed by the owner’s investments

BENCHMARK >20%

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16
Q

DEBT RATIO

A

TOTAL LIABILITIES/TOTAL ASSETS

How many assets the company must sell in order to pay off all of its liabilities

BENCHMARK <80%

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17
Q

DEBT TO EQUITY RATIO

A

TOTAL LIABILITIES/TOTAL EQUITY

How many times there are more liabilities than equity in a company

18
Q

EQUITY MULTIPLIER

A

TOTAL ASSETS/TOTAL EQUITY

How many times assets are higher than stockholders’ equity

BENCHMARK <5

19
Q

INTEREST COVERAGE

A

EBIT/INTEREST EXPENSE

How many times a company can pay its interest expenses using EBIT

BENCHMARK >5

20
Q

CURRENT RATIO

A

CURRENT ASSETS/CURRENT LIABILITIES

How many times a firm is able to pay its short term liabilities with its current assets

BENCHMARK >2

21
Q

QUICK RATIO (Acid test)

A

(CURRENT ASSETS-INVENTORY)/CURRENT LIABILITIES

How well a company can quickly convert its assets into cash in order to pay off its current liabilities

BENCHMARK >1

22
Q

CASH AVAILABILITY

A

(CASH & CASH EQUIVALENTS + MARKETABLE SECURITIES) / CURRENT LIABILITIES

How many times a firm is able to pay off its current liabilities with cash

23
Q

CASH CONVERSION CYCLE

A

INVENTORY DAYS + DEBTOR DAYS - CREDITOR DAYS

Inventory Days = Average Inventory/COGS * 365
Debtor days = Average Receivables/Sales * 365
Creditor days = Average Payables/Purchases * 365

How long cash is tied up in inventory before the inventory is sold and cash is collected from customers

24
Q

Inventory Days

A

Average Inventory/COGS * 365

How long it takes the company to sell the inventory

25
Q

Debtor Days

A

Average Receivables/Sales * 365

How long it takes to collect cash from sales (of inventory)

26
Q

Creditor Days

A

Average Payables/Purchases * 365

How long it takes to pay off vendors

27
Q

Dividend Payout Ratio

A

Dividends/Net Income

DPS/EPS (per share)

How much is distributed to shareholders in the form of dividends during the year as a % of net income

(1 - retention rate, 1- plowback ratio)

28
Q

Dividend Yield

A

DPS/Market Price of a share

How much dividends investors are getting for every dollar that the stock is worth

29
Q

Price Earning Ratio (P/E)

A

Market Capitalization/Net Income

Market price per share/EPS

How many times more the market is willing to pay for the stock compared to what it is worth

Market Capitalization = Market price per share * Number of shares (Market Value of Equity)

30
Q

ROE Dupont (2)

A

Net Income/Sales * Sales/Total Equity

31
Q

ROE Dupont (3)

A

Net Income/Sales *
Sales/Total Assets *
Total Assets/Total Equity

32
Q

ROE Dupont (5)

A 
Net Income/Pretax Profit * 
Pretax Profit/EBIT * 
EBIT/Sales *
Sales/Total Assets *
Total Assets/Total Equity

Tax burden * interest burden * profit margin * asset turnover * equity multiplier

33
Q

ROA Dupont

A

EBIT/Sales * Sales/Total Assets

34
Q

ROCE Dupont

A

EBIT/Sales * Sales/Capital Employed

35
Q

Sustainable growth rate

A

ROE * (1 - dividend payout ratio)

ROE * plowback ratio

36
Q

ROE leverage formula using ROA

A

(1-t) (ROA+(ROA-COD) * D/E)

COD (cost of debt) = Interest expense/Total liabilities

37
Q

COD (cost of debt)

A

Interest expense/Total liabilities

38
Q

ROE leverage formula using ROCE

A

(1-t) (ROCE + (ROCE-Rd) * Dib/E)

Rd (cost of debt) = Interest expense/Dib

39
Q

Rd (cost of interest-bearing debt)

A

Interest expense/Dib

40
Q

ROE leverage formula using RONA

A

(1-t) (RONA + (RONA-Rnd) * ND/E)

Rnd = (Interest Expense - Financial Income) /Net Debt

Net Debt = Dib - Financial Assets = Dib - (Cash and cash equivalents + marketable securities)

41
Q

Rnd (cost of net debt)

A

(Interest Expense - Financial Income) /Net Debt

42
Q

Net Debt

A

Dib - Financial Assets = Dib - (Cash and cash equivalents + marketable securities)

Ratios MAF (1 decks)

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