Financial Ratios
Order by
16 terms
Terms | Definitions |
|---|---|
 Current Ratio | Current Assets/Current Liabilities, Financial ratio for measuring a company's ability to pay current debts out of current assets. |
| Quick Ratio | (current assets - inventory) / Current liabilities, a financial ratio that measures the ability to pay current liabilities with quick assets (cash, marketable securities, accounts receivable). |
| Cash Ratio | cash/current liabilities, A cash-basis ratio used to evaluate solvency. |
| Inventory Turnover | COGS / Inventory, the number of times the average inventory has been sold and replaced in a given period of time. |
| Days Sales in Inventory | 365/inventory turnover-measures how many days inventory sits on average before its sold |
| Receivable turnover | Sales / Average Receivables, how many times, on average, a company turned its receivables into cash during an accounting period |
| Average Collection Period | 365/Receivable turnover, The average amount of time that a receivable is outstanding. |
| Payable Turnover | (COGS/average Accounts Payable), Accounts payable, is the number of times on average that a company pays its accounts in an accounting period |
| Average Payable and Trade days | 365/Payable turnover) Number of days on average that it takes to pay off accounts |
| Total Debt Ratio | total Liabilities/total assets, measure of leverage that takes into account all debts of all maturities to all creditors |
| Debt to Equity | Total Liabilities / Stockholder's Equity, How much debt there per dollar of equity. The proportion of owners contribution to loan contribution. |
| Times interest earned | EBIT / Interest Expense, The ratio shows the amount of resources generated for each dollar of interest expense. In general, a high ratio is viewed more favorable than a low ratio |
| Gross Profit Margin | Gross profit / Revenue |
| Net Profit Margin | Net Profit/Net Sales |
| Return on total Assets (ROA) | Net Income / Average Total Assets, A measure of the overall effectiveness of management in generating returns to common stockholders with its available assets. |
| Return on Equity (ROE) | Net Income/Total Equity, measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. |
First Time Here?
Welcome to Quizlet, a fun, free place to study. Try these flashcards, find others to study, or make your own.