Ch 3 Key Terms Stice

1 / 24
Asset Turnover
Click the card to flip 👆
Terms in this set (24)
DuPont Frameworka systematic approach for breaking down return on equity into three ratios: return on sales, asset turnover, and assets to equity ratio.Financial Ratioscomparisons of a company's financial elements that indicate how well the business is performing Relationships btwn financial statement amountsFinancial Statement Analysisinvolves the examination of both the relationships among financial statement numbers and the trends in those numbers over timeFixed Asset TurnoverSALES / AVG FIXED ASSETS # of dollars in sales generated by ea. dollar of fixed assetsLeverageinvesting with borrowed money as a way to amplify potential gains (at the risk of greater losses)Liquiditybeing in cash or easily convertible to cashMarginprofitability of ea. dollar in salesNumber of Days Sales in Inventorymeasures the number of days on average between buying the inventory from suppliers and selling it to customersPrice-Earnings RatioMARKET VALUE OF SHARES / NET INCOME relationship between market value of a C. and the company's current earningsReturn on AssetsNet Income / Total assets the number of pennies of net income generated by each dollar of assetsReturn on EquityNET INCOME / STOCKHOLDERS' EQUITY overall measure of the performance of a companyReturn on SalesNET INCOME / SALES number of pennies of profit generated by each dollar in salesTimes Interest EarnedINCOME / INTEREST EXPENSE number of times a company can make current interest paymentsTurnoverdegree to which assets are used to generate sales