Term 3 Ratio Formulas Flashcards
Gross Profit
Gross Profit/ Net Sales
%
Net Profit
Net Profit/ Net Sales
%
Rate of Return on Equity Ratio
Net Profit / Average Owners Equity {(2017 +2016)/2}
%
Rate of Return on Total Assets
Net Profit + Interest Expenses (Loan, Mortage, ect) / Average Total Assets
%
Rate of turnover of Inventories
Cost of Goods Sold/ Average Inventories
times per year
Rate of turnover of accounts receivable
Average Accounts Receivable x365 / Net Credit Sales
days
Current Ratio
Current Assets/ Current Liabilities
Decimal
Quick Ratio
Current Asset - (inventories+prepayments) / Current Liabilities - Bank Overdraft
Decimal
Debt Ratio
Total Liabilities/Total Assets
%
Equity Ratio
Total Owner’s Equity / Total Assets
Profitability Ratios
Gross Profit
Net Profit
Rate of Return on Equity Ratio
Rate of Return on Total Assets Ratio
Effectiveness of Management Policies
Rate of Turnover of Inventories
Rate of Turnover of accounts receivable
Financial Stability
Current Ratios
Quick Ratio
Debt Ratio
Equity Ratio
Vertical Analysis
Income Statement
Divide Net Sales
Balance Sheet
Divide Total Assets
Horizontal Analysis
2017-2016
Increase/Decrease /2016
