# Study sets matching "accounting ratios"

Study sets

Diagrams

Classes

Users

current ratio

quick or acid test

return on equity

return on capital employed

the higher this ratio, the more able a company is to pay back…

an indicator of whether a firm has enough short term assets to…

compares net income to average shareholder equity; measures ho…

possibly better than return on equity because it shows how wel…

current ratio

the higher this ratio, the more able a company is to pay back…

quick or acid test

an indicator of whether a firm has enough short term assets to…

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Current Ratio (Up or down?)

Current Ratio

Gross Margin Ratio (Up or down?)

Gross Margin Ratio

^ 2:1 Ratio is good, Used with the Balance Sheet

Explains what a comfortable amount of working capital is, the…

^ is better shows direct profit from sales, Used with the Inco…

It is the excess of Sales of COGS, it generally shows profitab…

Current Ratio (Up or down?)

^ 2:1 Ratio is good, Used with the Balance Sheet

Current Ratio

Explains what a comfortable amount of working capital is, the…

Earnings Per Share

Profit Margin Ratio

Return on Investment

Working capital

**profitability ratio**... meausers the net income earned on each s…

**Profitability ratio**... measures amount of net income earned wit…

Net Profit... -------------------... Common stock... *Profitability rat…

**Liquidity Ratio**... Current Assets - Current Liabilities

Earnings Per Share

**profitability ratio**... meausers the net income earned on each s…

Profit Margin Ratio

**Profitability ratio**... measures amount of net income earned wit…

Current Ratio

Acid-test ratio

Accounts receivable turnover

Inventory turnover

Current assets / current liabilities

Cash+ short-term investments + current receivables /current li…

Net Sales / Average accounts receivable, net

COGS / Average inventory

Current Ratio

Current assets / current liabilities

Acid-test ratio

Cash+ short-term investments + current receivables /current li…

working capital

current ratio

inventory turnover

days in inventory

=current assets - current liabilities... liquidity ratio

=current assets/ current liabilities... liquidity ratio... 1.25: com…

=cost of goods sold/ average inventory... liquidity ratio... 8: comp…

=365 days/ inventory turnover... liquidity ratio... 46: company take…

working capital

=current assets - current liabilities... liquidity ratio

current ratio

=current assets/ current liabilities... liquidity ratio... 1.25: com…

Profitability

Managerial Effectiveness

Financial Stability

Cash Flow

%Gross Profit... %Net Profit... %Return on Equity... %Return on Assets

(Days)Turnover of Inventories Rate... (Days)Turnover of A/c Recei…

_:1 Current... _:1 Quick... %Debt... %Equity

%Cash Flow to Revenue... %Cash Flow Adequacy... (Times)Long-term Deb…

Profitability

%Gross Profit... %Net Profit... %Return on Equity... %Return on Assets

Managerial Effectiveness

(Days)Turnover of Inventories Rate... (Days)Turnover of A/c Recei…

Types of ratios

Profitability Ratios

Return on Equity

Gross Margin %

profitability, leverage, solvency, working capital

Return on equity... Gross Margin... Return on sales... asset turnover... r…

ROE... net income/avg shareholder equity... measures the return to s…

gross margin/sales... measures the percent of markup the company…

Types of ratios

profitability, leverage, solvency, working capital

Profitability Ratios

Return on equity... Gross Margin... Return on sales... asset turnover... r…

Formula for Gross Profit Ratio

prices of goods enough to cover all cos…

compares profit to costs (i.e. 50% ----…

highlights shifts in number and variety…

=(gross profit/net sales)*100

Gross Profit Ratio

Gross Profit Ratio

Gross Profit Ratio

Formula for Gross Profit Ratio

=(gross profit/net sales)*100

prices of goods enough to cover all cos…

Gross Profit Ratio

Return on Equity (ROE)

Return on Assets (ROA)

Earnings per Share (EPS)

Quality of Income

Net Income/Average Stockholder's Equity

Net Income/Average total Assets

Net Income/ Average number Common Shares Outstanding

Net Cash from Operating Activities/Net Income

Return on Equity (ROE)

Net Income/Average Stockholder's Equity

Return on Assets (ROA)

Net Income/Average total Assets

Horizontal Analysis

Trend Analysis

Vertical Analysis

Working Capital

(Dollar Amount of Change / Base Period Amount) * 100

(Any Period Amount / Base Period Amount) * 100

(Specific Item / Base Amount) * 100

Current Assets - Current Liabilities

Horizontal Analysis

(Dollar Amount of Change / Base Period Amount) * 100

Trend Analysis

(Any Period Amount / Base Period Amount) * 100

gearing

leverage

high leverage

high gearing

The relationship between the debt and the equity of a business…

The relationship between the debt and the equity of a business…

There is a high level of borrowed external funds compared to i…

There is a high level of borrowed external funds compared to i…

gearing

The relationship between the debt and the equity of a business…

leverage

The relationship between the debt and the equity of a business…

Current Ratio

Net Profit Margin

Earnings per Share (EPS)

Total Asset Turnover

Current Assets / Current Liabilities

Net Income / Net Sales

Net Income / Avg. Number of Shares Outstanding

Net Sales / Avg. Total Assets

Current Ratio

Current Assets / Current Liabilities

Net Profit Margin

Net Income / Net Sales

Current Ratio

Debt Ratio

Inventory Turnover Ratio

Return on Net Sales

Current Assets/Current Liabilities

Total Liabilities / Total Assets

Cost of Goods Sold / Average Inventory

Net Income/Net Sales x 100%

Current Ratio

Current Assets/Current Liabilities

Debt Ratio

Total Liabilities / Total Assets

Liquidity ratios

Financial leverage ratios

Efficiency ratios

Profitability ratios

Ability of a firm to obtain the cash it needs to pay short-ter…

Debt:Equity ratio (gearing)

indicate how efficiently a venture uses its assets in producin…

indicates if a company is generating a profit and an adequate…

Liquidity ratios

Ability of a firm to obtain the cash it needs to pay short-ter…

Financial leverage ratios

Debt:Equity ratio (gearing)

current ratio

working capital

acid-test (quick) ratio

accounts receivable turnover

=current assests/current liabilities. ... measures short-term deb…

=current assests-current liabilities. ... measures how much capit…

cash+ short-term investments+ AR/current liabilities... measures…

=net credit sales/avg net AR. ... measures liquidity of accounts…

current ratio

=current assests/current liabilities. ... measures short-term deb…

working capital

=current assests-current liabilities. ... measures how much capit…

profit margin

return on assets

cash flows to assets

cash flow yield

Net income/net revenue

Net income/average total assets

Net cash flows from operating activities/average total assets

Net cash flows from operating activities/net income

profit margin

Net income/net revenue

return on assets

Net income/average total assets

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Current Ratio

Quick Ratio

Accts R Turnover

Days Sales in Accts R

Current Assets / Current Liabilities

(Cash + Short-Term Investments + Accts R) / Current Liabilities

Net Credit Sales / Avg Net Accts R

365 / Accts R Turnover

Current Ratio

Current Assets / Current Liabilities

Quick Ratio

(Cash + Short-Term Investments + Accts R) / Current Liabilities

measure liquidity

current ratio

measures of leverage

debt ratio

current ratio: # of times current assets could cover current l…

current assets / current liabilities

debt ratio & debt to equity ratio

total liabilities/total assets (% of funds needed to purchase…

measure liquidity

current ratio: # of times current assets could cover current l…

current ratio

current assets / current liabilities