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13 Cards in this Set
- Front
- Back
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current ratio= working capital ratio |
current assets / current liabilities
should be at least 1. the higher the ratio the better a company can meet its current obligations |
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return on assets |
net income / average total assets |
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return on equity |
net income/ average equity
a company that generate a high return relative to its shareolders equity is considered a good investment |
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debt ratio |
total liabilities / total libailities + owners equity (Total assets)
want to be low
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debt to equity ratio |
total liabilities / total owners equity
want to be low |
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inventory turnover |
cost of goods sold / average inventory
the number of times a company sells and replace inventory |
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average days sales in inventory |
365 / inventory turn
number of days sales, on average that a firm carries in inventory |
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acid test ratio = quick test ratio |
current assets - inventory / current liabilities
indicates if the company has enough current assets to cover immediate liabilities without selling inventory |
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accounts recievable turnover |
sales / average net accounts receivable
number of times the accounts receivable are turned over or are collected during the period |
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average collection period |
365 / accounts receivable turn
number of days it takes on average to collect an account receivable |
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earnings per share |
net income / weighted average number of share of common stock at end of year
dollar amount associated with each share of stock |
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book value per share |
assets - liabilities / number of shares of common stock at the end of the year
dollar amount of equity that is associated with each share of stock |
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price earnings ratio |
market price per share / earnings per share
how expensive a stock is in relation to its earnings |
