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Study sets matching "accounting ratios"

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Study sets matching "accounting ratios"

16 terms
Accounting Ratios
Stock Turnover
Period of Credit Allowed
Period of Credit Recieved
Return on Capital Employed
Stock Turnover
Period of Credit Allowed
Accounting Ratios
Current Ratio
Quick ("Acid Test") Ratio
Interest Coverage (Times Interest Earn…
Return on Assets (ROA)
Current Assets/Current Liabilities... Firm's ability to meet it…
(Cash + Marketable Securities + Accounts Receivable)/Current…
EBIT/Interest Expense... Indicates the relative protection that…
Net Income/Average Total Assets... Firm's performance in using…
Current Ratio
Current Assets/Current Liabilities... Firm's ability to meet it…
Quick ("Acid Test") Ratio
(Cash + Marketable Securities + Accounts Receivable)/Current…
9 terms
Accounting Ratios
Acid Test Ratio
Inventory Turnover
Current Ratio
Gross Profit Percentage
Acid Test Ratio
Inventory Turnover
10 terms
Accounting Ratios
Debt to Equity
Current
Return On Investment
Gross Margin
Total Debt/Total Shareholders Equity
Current Assets/Current Liabilities
Net Income/Average Total Assets
Gross Margin/Sales
Debt to Equity
Total Debt/Total Shareholders Equity
Current
Current Assets/Current Liabilities
11 terms
Accounting Ratios
Return on Capital Employed (ROCE)
Gross Profit Margin (GP to Sales Ratio)
Mark Up
Expenses/Overheads to Sales
Shows how good the business is at using the money invested in…
Shows the % of sales that is retained as Gross Profit
Shows the % added to the cost to arrive at the selling price
Shows the % of turnover/sales used to pay expenses/overheads
Return on Capital Employed (ROCE)
Shows how good the business is at using the money invested in…
Gross Profit Margin (GP to Sales Ratio)
Shows the % of sales that is retained as Gross Profit
34 terms
Accounting Ratios
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 t…
compares net income to average shareholder equity; measures h…
possibly better than return on equity because it shows how we…
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 t…
12 terms
Accounting Ratios
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 Inc…
It is the excess of Sales of COGS, it generally shows profita…
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…
11 terms
Accounting Ratios
Return on Capital Employed (ROCE)
Gross Profit Margin (GP to Sales)
Mark Up
Expenses/Overheads to Sales
Profit for the Year or Profit from Operations/Capital x 100 (…
Gross Profit/Sales x 100 (Profitability)
Gross Profit/Cost of Sales x 100 (Profitability)
Expenses/Sales x 100 (Profitability)
Return on Capital Employed (ROCE)
Profit for the Year or Profit from Operations/Capital x 100 (…
Gross Profit Margin (GP to Sales)
Gross Profit/Sales x 100 (Profitability)
19 terms
Accounting Ratios
ROCE
Gross Profit Mark-up
Gross Profit Margin
Current Ratio
(Profit before Interest & Tax÷Capital Employed) × 100
(Gross Profit÷ Cost of Sales) ×100
(Gross Profit÷Sales) × 100
Current Assets÷Current Liabilities
ROCE
(Profit before Interest & Tax÷Capital Employed) × 100
Gross Profit Mark-up
(Gross Profit÷ Cost of Sales) ×100
18 terms
Accounting Ratios
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 Rece…
_:1 Current... _:1 Quick... %Debt... %Equity
%Cash Flow to Revenue... %Cash Flow Adequacy... (Times)Long-term De…
Profitability
%Gross Profit... %Net Profit... %Return on Equity... %Return on Assets
Managerial Effectiveness
(Days)Turnover of Inventories Rate... (Days)Turnover of A/c Rece…
34 terms
Accounting Ratios
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 t…
compares net income to average shareholder equity; measures h…
possibly better than return on equity because it shows how we…
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 t…
19 terms
accounting ratios
working capital
current ratio
current cash debt coverage
inventory turnover
current assets- current liabilities
current assets/current liabilities
money provided by operating activities/average current liabil…
COGS/Avg. Inventory
working capital
current assets- current liabilities
current ratio
current assets/current liabilities
37 terms
Accounting Ratios
Earnings Per Share Ratio
Retained Earnings
Book Value
Debt to Equity Ratio
Net Income (less preferred dividends) ... ----------------------…
Beg RE + Net Income - Dividends
Liability - Unamoritized Discount
Total Liability ... ----------------------------------------... Tot…
Earnings Per Share Ratio
Net Income (less preferred dividends) ... ----------------------…
Retained Earnings
Beg RE + Net Income - Dividends
24 terms
Accounting Ratios
ROE
ROA
ROS
Debt to Equity
NI/ Average SE
[NI + IntExp(1-tax)]/Average Total Assets
[NI + IntExp(1-tax)]/Net Sales
Average Total Liability/ Average Se
ROE
NI/ Average SE
ROA
[NI + IntExp(1-tax)]/Average Total Assets
15 terms
Accounting Ratios
Return on Equity
Return on Total Assets
Net Profit Margin
Gross Profit Margin
Shows the return on the owner's investment in the business.... T…
Shows how well the business is using its assets to generate p…
Shows the amount of profit generated from each dollar of sale…
Shows the ability to generate enough profit to cover operatin…
Return on Equity
Shows the return on the owner's investment in the business.... T…
Return on Total Assets
Shows how well the business is using its assets to generate p…
12 terms
Accounting Ratios
Current Ratio
Accounts Receivable Turnover
Average Collection Period
Inventory Turnover
Current Assets... -----------------------... Current Liabilities
net credit sales ---------------average accounts receivable
365 days... ---------------... Accounts Receivable Turnover
Cost of Goods Sold... ----------------------------... Average Inven…
Current Ratio
Current Assets... -----------------------... Current Liabilities
Accounts Receivable Turnover
net credit sales ---------------average accounts receivable
23 terms
Accounting Ratios
Acid Test (Quick) Ratio
Acid Test Ratio Details
Inventory Turnover
Inventory turnover Details
Cash + A/R + Marketable Securities + CD's within 1 year / Cur…
tell whether a company's current liabilities can be paid with…
How many times the company sells its average inventory
Acid Test (Quick) Ratio
Cash + A/R + Marketable Securities + CD's within 1 year / Cur…
Acid Test Ratio Details
tell whether a company's current liabilities can be paid with…
12 terms
Accounting Ratios
Return on equity
Return on Assets
Net profit margin
Earnings per share
NI/avergage Total Stockhold's Equity
net income/average total assets
Net Income/Net Sales Revenue
Net Income/Average Number of Common Shares Outstanding
Return on equity
NI/avergage Total Stockhold's Equity
Return on Assets
net income/average total assets
11 terms
Accounting Ratios
Return on Equity (ROE)
Return on Assets (ROA)
Financial Leverage Percentage
EPS
Net Income/... Average Stockholders Equity... Profitability
Net Income + Interest Expense (net of tax)/... Average Total Ass…
Return on Equity - Return on Assets... Profitability
Net Income/... Outstanding Shares... Profitability
Return on Equity (ROE)
Net Income/... Average Stockholders Equity... Profitability
Return on Assets (ROA)
Net Income + Interest Expense (net of tax)/... Average Total Ass…
17 terms
Accounting Ratios
Current Ratio
Quick ("Acid Test") Ratio
Interest Coverage (Times Interest Earn…
Return on Assets (ROA)
Current Assets/Current Liabilities... Firm's ability to meet it…
(Cash + Marketable Securities + Accounts Receivable)/Current…
EBIT/Interest Expense... Indicates the relative protection that…
Net Income/Average Total Assets... Firm's performance in using…
Current Ratio
Current Assets/Current Liabilities... Firm's ability to meet it…
Quick ("Acid Test") Ratio
(Cash + Marketable Securities + Accounts Receivable)/Current…
23 terms
accounting ratios
asset turnover
return on assets
price- earnings (PE) ratio
payout ratio
net sales/avg. total assets ... ^profitability
net inc./avg. total assets... ^profitability
Stock price per share/ earnings per share... ^profitability
cash dividends declared on common stock/ net inc. ... ^profitabi…
asset turnover
net sales/avg. total assets ... ^profitability
return on assets
net inc./avg. total assets... ^profitability
5 terms
Accounting-ratios
Return on capital employed
Gross profit mark up/margin percentage
Net profit percentage
Current ratio 2:1
Net profit + interest / capital employed x100
Gross profit / cost of sales x100
Net profit + interest / sales x100
Current assets / current liabilities :1
Return on capital employed
Net profit + interest / capital employed x100
Gross profit mark up/margin percentage
Gross profit / cost of sales x100
6 terms
Accounting Ratios
acid-test ratio
gross margin ratio
inventory turnover
days' sales in inventory
cash and cash equivalents plus short-term investments plus cu…
net sales minus cost of goods sold divided by net sales
cost of goods sold divided by average inventory
ending inventory divided by cost of goods sold times 365
acid-test ratio
cash and cash equivalents plus short-term investments plus cu…
gross margin ratio
net sales minus cost of goods sold divided by net sales
13 terms
Accounting ratios
Current ratio
Acid test ratio
Receivables turn over ratio
Inventory turn over ratio
Current assets/current liabilities
Cash+short term investments+net receivables/current liabilities
Net credit sales/avg receivables
Cogs/avg inventory
Current ratio
Current assets/current liabilities
Acid test ratio
Cash+short term investments+net receivables/current liabilities
11 terms
accounting ratios
current ratio
quick (acid test) ratio
accounts receivables turnover
days' sales outstanding
current assets // current liabilities
(cash + short term investments + net current receivables) //…
net credit sales // average net accounts receivable
365 // accounts receivable turnover
current ratio
current assets // current liabilities
quick (acid test) ratio
(cash + short term investments + net current receivables) //…
17 terms
Accounting Ratios
Return on Equity
Return on Assets
Financial Leverage Percentage
Earnings Per Share
net income/average stockholders' equity
Net Income + Interest expense (Net interest * 1-tax rate)/ av…
Return on Equity- Return on Assets
Net Income/average number of shares of common stock outstanding
Return on Equity
net income/average stockholders' equity
Return on Assets
Net Income + Interest expense (Net interest * 1-tax rate)/ av…
12 terms
Accounting Ratios
Profit Margin
Gross Profit Percentage
Current Ratio
Quick Ratio
Net Income/Net Sales
Gross Profit/Net Sales
Current Assets/Current Liabilities
Quick Assets/Current liabilities
Profit Margin
Net Income/Net Sales
Gross Profit Percentage
Gross Profit/Net Sales
12 terms
Accounting Ratios
Return on Equity
Return on Total Assets
Net profit Margin
GROSS PROFIT MARGIN
looks at the return the owner is getting for the money he has…
It looks at how well the business' assets are performing. Giv…
Looks a the return of the final profit figure generated from…
Looks at the return of profit made directly from the buying a…
Return on Equity
looks at the return the owner is getting for the money he has…
Return on Total Assets
It looks at how well the business' assets are performing. Giv…
20 terms
Accounting Ratios
Working Capital
Current Ratio
Cash Ratio
Acid/Quick Ratio
H! A business's ability to meet its short term obligations wi…
H! The company's ability to pay current liabilities from curr…
H! The company's ability to pay current liabilities from cash…
H! The company's ability to pay all its current liabilities i…
Working Capital
H! A business's ability to meet its short term obligations wi…
Current Ratio
H! The company's ability to pay current liabilities from curr…
16 terms
Accounting Ratios
Gross Profit Margin
Return on Sales (Net Profit Margin)
Asset Turnover
Return on Assets
Gross Profit/Net Sales
Net Income/Net Sales
Net Sales/Average Total Assets
Net Income/Average Total Assets
Gross Profit Margin
Gross Profit/Net Sales
Return on Sales (Net Profit Margin)
Net Income/Net Sales
15 terms
Accounting Ratios
current ratio
debt to equity ratio
receivables turnover ratio
inventory turnover ratio
current assets/current liabilities
total liabilities/owner's equity
net sales (or credit sales)/average accounts receivable
COGS/average inventory
current ratio
current assets/current liabilities
debt to equity ratio
total liabilities/owner's equity
15 terms
Accounting Ratios
Debt Ratio
Current Ratio (Liquidity - DPF)
Return on Sales (Profitability - DPF)
Asset Turnover (Efficiency)
Total Liabilities / Total Assets... ... (represents the proportion…
Current Assets / Current Liabilities ... (ability to pay its de…
Net Income / Sales ... (pennies of profit on every dollar of sa…
Sales / Total Assets... (overall measure of company efficiency…
Debt Ratio
Total Liabilities / Total Assets... ... (represents the proportion…
Current Ratio (Liquidity - DPF)
Current Assets / Current Liabilities ... (ability to pay its de…
9 terms
Accounting Ratios
Asset Turnover Ratio
Inventory Turnover Ratio
Current Ratio
Accounts Receivable Turnover Ratio
Net Sales/Total Assets
COGS / Average Inventory
Current Assets / Current Liabilities
Net Credit Sales / Average Receivables
Asset Turnover Ratio
Net Sales/Total Assets
Inventory Turnover Ratio
COGS / Average Inventory
8 terms
accounting ratios
current ratio
working capital
gross profit rate
net income
ca/cl
ca-cl
gross profit/net sales
net income/net sales
current ratio
ca/cl
working capital
ca-cl
22 terms
accounting ratios
Cash
Current
accounts receivables turnover
average collection period
cash+ marketable securities / total assets
current assets/ current liabilities
total revenue / AR
365 days / (total revenue / AR)
Cash
cash+ marketable securities / total assets
Current
current assets/ current liabilities
11 terms
Accounting Ratios
Analyzing Liquidity
Current Ratio
Quick Ratio
Merchandise Inventory Turnover
analyze the ability of the business to pay current liabilitie…
current assets / current liabilities... - indicates whether a co…
cash + A/R + marketable securities (investments) / current li…
cost of goods sold / average inventory... - indicates the number…
Analyzing Liquidity
analyze the ability of the business to pay current liabilitie…
Current Ratio
current assets / current liabilities... - indicates whether a co…
14 terms
Accounting Ratios
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
24 terms
Accounting Ratios
Profit Margin
Return on Equity
Return on Assets
Earnings Per Share
Net Income/Net Revenue ... *Profitability
Net Income/Average Common Equity ... *Profitability
Net Income/Average Total Assets ... *Profitability
Net Income/Average Number of Common Shares Outstanding ... *Prof…
Profit Margin
Net Income/Net Revenue ... *Profitability
Return on Equity
Net Income/Average Common Equity ... *Profitability
52 terms
Accounting Ratios
How to calculate net income?
How to calculate Return on Shareholder…
What does Return on Shareholders' Equi…
What category does the ROE ratio fall…
Sales revenue - cost of good sold - other expenses
(Net income - preferred stock dividends) /... Shareholders' Equity
Rate of return generated by a business for its common shareho…
Profitability
How to calculate net income?
Sales revenue - cost of good sold - other expenses
How to calculate Return on Shareholder…
(Net income - preferred stock dividends) /... Shareholders' Equity
14 terms
Accounting Ratios
Current Ratio
Quick Ratio
Net Working Capital Ratio
Profit Margin
Current Assets / Current Liabilities
(Cash + Short Term Securities + Accounts Receivable) / Curren…
(Current Assets - Current Liabilities) / Total Assets
Net Income / Revenue
Current Ratio
Current Assets / Current Liabilities
Quick Ratio
(Cash + Short Term Securities + Accounts Receivable) / Curren…
12 terms
Accounting ratios
working capital
current ratio
quick ratio
collection period
measure of short-term debt paying ability
measures liquidity and short-term debt paying ability
measures immediate short-term liquidity
measures number of days that receivables are outstanding
working capital
measure of short-term debt paying ability
current ratio
measures liquidity and short-term debt paying ability
11 terms
Accounting Ratios
Liquidity
Stability/Leverage
Profitability
Current Ratio
Businesses ability to pay it's debts when they fall due.... Curr…
Businesses ability to survive long term. ... Debt to equity ratio.
Businesses ability to make an acceptable level of profit. ... Gr…
Measures businesses ability to pay short term debts using cur…
Liquidity
Businesses ability to pay it's debts when they fall due.... Curr…
Stability/Leverage
Businesses ability to survive long term. ... Debt to equity ratio.
15 terms
Accounting - Ratios
Receivables turnover ratio
Average collection period
Inventory turnover ratio
Average days in inventory
net credit sales/ave. accounts receivable
365/receivables turnover ratio
COGS/ave. inventory
365/inventory turnover ratio
Receivables turnover ratio
net credit sales/ave. accounts receivable
Average collection period
365/receivables turnover ratio
25 terms
Accounting Ratios
current ratio
quick ratio
gross profit margin
net profit margin / operating on sales
current assets / current liabilities
current assets - inventory / current liabilities
gross profit / revenue x 100%
operating profit / sales x 100%
current ratio
current assets / current liabilities
quick ratio
current assets - inventory / current liabilities
16 terms
Accounting Ratios
Current Ratio
Quick or Acid-Test Ratio
Current Cash Debt Coverage Ratio
Receivables Turnover
measures short-term debt-paying ability ... = Current assets / C…
measures immediate short-term liquidity ... = Cash, Short-term i…
measures a company's ability to pay off its current liabiliti…
measures liquidity of receivables ... = Net sales / Average trad…
Current Ratio
measures short-term debt-paying ability ... = Current assets / C…
Quick or Acid-Test Ratio
measures immediate short-term liquidity ... = Cash, Short-term i…
21 terms
Accounting ratios
Profit margin
Asset turnover
Return on assets
Cash flow yield
Net income/net revenue
Net rev/avg total assets
Net income/avg total assets
Net cash flows from operating activities/net income
Profit margin
Net income/net revenue
Asset turnover
Net rev/avg total assets
12 terms
Accounting Ratios
Gross profit margin
Profit Margin
Return on capital employed (ROCE)
Current ratio
(Gross Profit / Revenue) = (Revenue-COS / Revenue)
(Net Profit / Revenue) = (Operating Profit±Net Interest / Rev…
(Operating Profit) / (Total Assets - Current Liabilities)
Current Assets / Current Liabilities
Gross profit margin
(Gross Profit / Revenue) = (Revenue-COS / Revenue)
Profit Margin
(Net Profit / Revenue) = (Operating Profit±Net Interest / Rev…
10 terms
Ratios accounting
Gross profit ratio
Net profit ratio
rate of stock turnover
Expenses ratio
Gross profit / turnover x 100
Net profit / turnover x 100
Cost of sales / average stock
Expenses / turnover x 100
Gross profit ratio
Gross profit / turnover x 100
Net profit ratio
Net profit / turnover x 100
15 terms
Accounting Ratios
Gross profit
Operating Margin
Profit Margin
Current Ratio
gross profit/Net Sales
Operating Income/Net Sales
Net income/Net sales
Current Assets/Current Liabilities
Gross profit
gross profit/Net Sales
Operating Margin
Operating Income/Net Sales
5 terms
Accounting (Ratios)
Return on Equity
Earnings per Share
Current Ratio
Inventory Turnover Ratio
Net Income / Avg. Stock. Eq.
Net Income / # shares of stock
Total Current Assets / Total Current Liabilities
CoGS / Avg. Inventory
Return on Equity
Net Income / Avg. Stock. Eq.
Earnings per Share
Net Income / # shares of stock
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