32 terms

Current Ratio

measures the company's ability to meet short-term obligations with current assets

Higher

the ------ the current ratio, the more capable a company is of paying off short term obligations

Quick Ratio

measures the company's ability to meet short-term obligations with the most liquid assets

Higher

the ------ the quick ratio, the more capable a company is of meeting short term obligations

Inventory Turnover

measures how many times inventory is sold and replaced over a period

Higher

the ------ inventory turnover, the more efficient the company is

Days Sales In Inventory

number of days it takes to sell the inventory

Lower

the lower the days sales in inventory, the more efficient

Accounts Receivable Turnover

measures the speed at which a firm converts its receivables into cash

Higher

the ------ the accounts receivable turnover, the more efficient

Days Sales Outstanding

number of days it takes to receive cash from the customer

Lower

the ------- the number of days sales outstanding, the more efficient

Fixed Assets Turnover

measures the utilization of the company's fixed assets

Higher

the ----- the fixed asset turnover, the more utilization

Total Asset Turnover

measures the utilization of the company's total assets

Higher

the ------- total asset turnover, the more efficient

Current Ratio, Quick Ratio

to assess liquidity risk, use the ----------- when the inventory turnover is high, and use the ------------ when the inventory turnover is low

Debt Ratio

portion of debt relative to assets, greater than one, a company has more debt relative to assets

Leverage

the amount of debt used to finance its assets, this is high when more debt is used to cover than equity because they can invest in business operations without using equity

Times Interest Earned

measures ability to cover interest charges using operating profit

EBIT

earnings before interest and tax

EBITDA

earnings before interst, tax, depreciation, amortization

Cash Coverage

measures ability to cover interest charges using cash operating profit

Gross Profit Margin

margin available to cover expenses other than cost of goods sold

Operating Profit Margin

margin available to cover interest charges

Net Profit Margin

margin available to cover dividends

Return on Assets

measures how efficiently assets are used to generate earnings

Return on Equity

measures how much profit company generates with shareholder's money

Price/Earnings

indication of future growth in earnings compared to current EPS

Price/Book

measures value added since the inception of the company

Volatility

the higher, the riskier

Weighted Average Cost of Capital

weights the different cost of capital components based on a company's optimal capital structure, used for management purposes.