ACCT 209 Equations

Current Ratio
current assets / current liabilities
Acid Test (or quick) ratio
(cash + marketable securities + AR) / current liabilities

AR = accounts receivables
Accounts Receivable Turnover
net sales / average accounts receivable
Average Days to collect Receivables
365 / accounts receivable turnover
Inventory Turnover
COGS / average inventory

COGS = cost of goods sold
# times interest earned
(net income + interest expense + income tax expense) / interest expense
Debt to Equity Ratio
total liabilities / total stockholder's equity
Return on Common Equity
(net income - preferred dividends) / average common stockholder's equity
Return on Assets
(net income + interest expense) / average total assets
Working Capital
current assets - current liabilities