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18 Cards in this Set
- Front
- Back
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Profit Margin |
Net Income ➗ Sales
% |
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Return on Assets |
Net Income ➗ Total Assets OR (Net Income➗Sales)(Sales➗Total assets)
% |
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Return on Equity |
Net income ➗ SHE OR Return on Assets➗(1-DEBT/Assets)
% |
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Profitability Ratios |
A firms ability to earn return on: sales, assets, invested capital. 1. profit margin 2. Return on assets 3. Return on equity |
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Asset utilization ratios |
The speed at which the firm is turning over acc. receivables, inventory, fixed assets. 1. Receivables turnover 2. Avg. collection period 3. Inventory turnover 4. Fixed assets turnover 5. Total assets turnover |
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Receivables turnover |
Credit sales ➗ Receivables |
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Average collection period |
Accounts Receivable➗ Average daily credit sales (total credit sales/360) |
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Inventory turnover |
Sales➗Inventory |
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Fixed asset turnover |
Sales➗Fixed assets |
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Total asset turnover |
Sales➗Total assets |
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Liquidity ratios |
Ability to pay off short-term obligations 1. Current ratio 2. Quick ratio |
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Current ratio |
Current assets➗Current liabilities |
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Quick ratio |
(current assets-inventory)➗ current liabilities |
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Debt utilization ratios |
Estimates the overall debt position of the firm 1. Debt to total assets 2. Times interest earned 3. Fixed charge coverage |
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Debt to total assets |
Total debt➗ Total assets |
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Debt to total assets |
Total debt➗ Total assets |
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Times interest earned |
*Income before interest and taxes *EBIT➗ Interest |
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Fixed charge coverage |
Income before fixed charges and taxes➗ Fixed charges |
