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Flashcards in Ratio equations Deck (22)
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1
Q

Equity Multiplier

A

Total assets/Total equity

2
Q

debt to equity ratio

A

total debt/ total equity

3
Q

total debt ratio

A

(total assets - total equity)/ total assets

4
Q

Cash ratio

A

cash/ current liabilities

Measures short-term debt paying ability

5
Q

quick ratio

A

(Current assets-inventory)/ current liabilities

6
Q

Current ratio

A

Current assets/ current liabilities

ability to pay short term debts

7
Q

price-earnings ratio

A

Market price per share/ basic earnings per share

8
Q

basic earnings per share

A

profit available to common shareholders/ weighted ave # of common shares

not very useful, you need to divide it by something else to be comparable

9
Q

market to book ratio

A

market value per share/ book value per share

10
Q

Return on Equity (RoE)

A

Net income/ total equity

11
Q

Return on assets (RoA)

A

net income/ total assets

for every dollar in assets they get $x in income

12
Q

Profit margin

A

net income/ sales

13
Q

total asset turnover

A

sales/ total assets

higher is better: it indicates that for every dollar invested in assets, more net income is being generated

14
Q

receivable turnover

A

Net credit sales/ average accounts receivable
(from this year and previous year)
Measures liquidity of receivables

15
Q

Inventory turnover

A

COGS/inventory

16
Q

Cash coverage ratio

A

(EBIT + Depreciation)/ Interest

note: Earnings before interest and taxes

17
Q

Long-term debt ratio

A

Long-term debt/ (long-term debt - total equity)

18
Q

debt to asset ratio

A

total liabilities/total assets
(percentage of assets financed by debts)
Solvency ratio, ability to pay off short term debts

19
Q

Working capital

A

Current assets-current liabilities

20
Q

payback ratio

A

cash dividends declared/net income

Measures the percentage of profit distributed in the form of cash dividends to common shareholders

21
Q

Dividends yeild

A

dividends declared per share/market value per share

Measures the profit generated by each share, based on the market price of the shares

22
Q

return on common shareholders’ equity

A

income available to CS/Ave CS equity

Measures the company’s profitability from the shareholders’ viewpoint