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20 Cards in this Set
- Front
- Back
Current Ratio
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Current Assets / Current Liabilities
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Quick Ratio
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Also known as Acid-Test Ratio
(Cash + Cash Equivalents + Receivables + Marketable Securities) / Current Liabilities Note: excludes inventories and prepaid expenses A level trend of this ratio can be an indicator of good management |
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Receivables Turnover
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indicates efficiency of receivables collection and quality of receivables
Net Credit Sales / Average Trade Receivables (Net) |
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Average Collection Period (or Days Sales Outstanding)
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365 / Receivables Turnover
or (365 * Average Trade Receivables) / Net Credit Sales |
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Inventory Turnover
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Cost of Sales / Average Inventory
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Days Sales in Inventory
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365 / Inventory Turnover
or (365 * Average Inventory) / Cost of Sales |
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Accounts Payables Turnover
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Cost of Goods Sold / Average Accounts Payable
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Days Purchases in Accounts Payable
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365 / Accounts Payable Turnover
Or (365 * Average Accounts Payable) / Cost of Goods Sold |
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Operating Cycle
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Average Collection Period + Number of Days in Inventory
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Cash Flow Cycle
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Operating Cycle - (days purchases in accounts payable)
Recognizes cash is not used to purchase inventory at the time it is required |
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Financial Leverage Index
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Takes into account the tax deductible nature of leveraged interest expense
Return on Equity / Adjusted Return on Assets where ROA is (Net Income + interest expense(1-tax rate))/Assets FLI>1 means financial leverage is favorable FLI<1 is unfavorable (interest too high, inefficient use of assets) |
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Financial Leverage Ratio
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Total Assets / Owners' Equity
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Asset Coverage
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Total Assets / Long-Term Debt
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Times Interest Earned
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EBIT (Net Income + Interest Expense + Income Tax Expense) / Interest Expense
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Earnings to Fixed Charges
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Takes into account use of lease financing
(EBIT + Lease Charges) / (Interest Expense + Lease Charges) |
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Return on Assets
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Net Income after Taxes / Average Total Assets
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Asset Turnover
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Sales / Average Total Assets
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Return on Common Stockholders' Equity
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(Net income after taxes - Preferred Dividends) / Average Common Stockholders' Equity
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ROE breakdown (DuPont Analysis)
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ROE = Adjusted Profit Margin x Asset Turnover x Financial Leverage
Adjusted profit margin is (net income - preferred dividends) / sales |
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Return on Stockholders' Investment
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(Dividends + Market value of earnings retained) /
(number of shares x share price) |