Flashcards in Financial Statement Ratios Deck (19)

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1

## Working Capital

###
Current assets - Current liabilities

measure solvency

2

## Current Ratio

###
Current assets / Current liabilities

short term debt paying ability

3

## Quick ratio/acid test

###
CMR(rec.net) / Current liabilities

immediate short term liquidity

4

## Current cash debt coverage ratio

###
Net cash provided by operating activities /

Average current liabilities

ability to pay off current liabilities in a given year from its operations

5

## Receivables turnover

###
Net CREDIT sales / Average trade receivables(net)

liquidity of receivables

6

## Inventory turnover

###
Cost of goods sold / Average inventory

liquidity of inventory

7

## Asset turnover

###
Net sales / Average total assets

measures how efficiently assets are used to generate sales

8

## # of day's supply in average inventory

###
360 / inventory turnover

OR

Average ending inventory / Average daily COGS

measures # of days required to sell inventory

9

## Profit margin on sales (gross margin)

###
Net income / Net sales

measures net income generated by each dollar of sale

10

## Rate of return on assets

###
Net income / Average total assets

measures over all profitability of assets

11

## Rate of return on common stock equity (ret on equity)

###
Net income - Preferred dividends / Average common stockholder's equity

measures profitability of owner's investment

12

## Earnings per share

###
Net income - Preferred dividends / weighted shares of CS outstanding

measures net income on each share of common stock

13

## Price earnings ratio

###
Market price of stock / earnings per share

measures the ratio of market price per share to earnings per share

14

## Payout ratio

###
Cash dividends / Net income

measures percentage of earnings distributed in the form of dividends

15

## Debt to Equity

###
total debt / stockholder's equity

shows creditors the company's ability to sustain losses

16

## Debt to total assets

###
total debt / total assets

measures the % of total assets provided by creditors

17

## Times interest earned

###
Income b4 interest expense and taxes / interest expense

measures ability to meet interest payments as they come due

18

## Cash debt coverage ratio

###
net cash provided by operating activities / average total liabilities

measures a company's ability to repay its total liabilities in a given year from its operations

19