16 terms

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.