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Financial Ratios
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Terms in this set (40)
Current Ratio
Current Assets / Current Liabilities
Quick Ratio
(Cash + Short-term marketable investments + Receivables) /
Current liabilities
Cash Ratio
(Cash + Short-term marketable investments) / Current liabilities
Defensive Interval Ratio
(Cash + Short-term marketable investments + Receivables) / Daily cash expenditures
Receivables turnover ratio
Total revenue / Average receivables
Days of sales outstanding (DSO)
Number of days in period / Receivables turnover ratio
Inventory turnover ratio
COGS / Average Inventory
Days of Inventory on Hand (DOH)
Nuber of days in period / Inventory turnover ratio
Payables turnover ratio
Purchases / Average trade payables
Number of days of payables
Number of days in period / Payables turnover ratio
Cash conversion cycle (net operating cycle)
DOH + DSO - Number of days of payables
Working capital turnover ratio
Total revenue / Average working capital
Fixed asset turnover ratio
Total revenue / Average net fixed assets
Total asset turnover ratio
Total revenue / Average total assets
Gross profit margin
Gross profit / Total revenue
Operating profit margin
Operating profit / Total revenue
Pretax margin
EBT / Total revenue
Net profit margin
Net income / Total revenue
Operating return on assets
Operating income / Average total assets
Return on assets (ROA)
Net income / Average total assets
Return on equity (ROE)
Net income / Average shareholders' equity
Return on total capital
EBIT / (Interest bearing debt + Shareholder's equity)
Return on common equity
(Net income - Preferred dividends) / Average common shareholders' equity
Tax burden
Net income / Earnings before taxes
Interest burden
EBT / EBIT
EBIT margin
EBIT / Total revenue
Financial leverage ratio (equity multiplier)
Average total assets / Average shareholders' equity
Total debt
Total of interest-bearing short-term and long-term debt, excluding liabilities such as accrued expenses and accounts payable
Debt-to-assets ratio
Total debt / Total assets
Debt-to-equity ratio
Total debt / Total shareholders' equity
Debt-to-capital ratio
Total debt / (Total debt + Total shareholders' equity)
Interest coverage ratio
EBIT / Interest payments
Fixed charge coverage ratio
(EBIT + Lease payments) / (Interest payments + Lease payments)
Dividend payout ratio
Common share dividends / Net income attributable to common shares
Retention ratio
(Net income attributable to common shares - common share dividends) / Net income attributable to common shares
1 - Payout ratio
Sustainable growth rate (SGR)
Retention rate * ROE
Earnings per share
(Net income - Preferred dividends) / Weighted average number of ordinary shares outstanding
Book value per share
Common stockholders' equity / Total number of common shares outstanding
Free cash flow to equity (FCFE)
Cash flow from operating activities (CFO) - Investment in fixed capital + Net borrowing
Free cash flow to the firm (FCFF)
Cash flow from operating activities (CFO) + Interest expense * (1 - Tax rate) - Investment in fixed capital
Interest is added back if deducted to get CFO
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