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29 Cards in this Set

  • Front
  • Back
Tests of Profitability
ROE; ROA; Financial Leverage; EPS; Quality of Income; Profit Margin; Fixed Asset Turnover.
Tests of Liquidity
Cash Ratio; Current Ratio; Quick Ratio; Receivables Turnover; Inventory Turnover.
Tests of Solvency and Equity Position
Times Interest Earned; Cash Coverage; Debt-to-Equity.
Market Tests
P/E; Dividend Yield.
Miscellaneous Tests
Book Value per Share
Return on Equity
(Income Before Extraordinary) / (Average Owners' Equity)
Return on Assets
(Income + Interest Expense Net of Tax) / (Avg Assets)
Financial Leverage
ROE - ROA or
(Avg Assets) / (Avg SE)
Earnings per Share
(Income Avail to Common SH) / (# of Common Shares)
Quality of Income
(Operating Cash Flows) / (Net Income)
Profit Margin
(Income B4 Extraordinary) / (Net Sales)
Fixed Asset Turnover
(Net Sales) / (Avg Net PPE)
Cash Ratio
(Cash & Equivalents) / (Current Liabilities)
Current Ratio
(Current Assets) / (Current Liabilites)
Quick Ratio
(Quick Assets) / (Current Liabilities)

*No Inventory in Quick Assets
Receivables Turnover
(Net Credit Sales) / (Avg AR)
Inventory Turnover
CGS / (Avg Inventory)
Times Interest Earned
(Income + Interest + IncTax) / (Interest Expense)
Cash Coverage Ratio
(Operating Cash Flow B4 Interest and Income Tax) / (Interest Expense)
Debt to Equity
(Total Liabilities) / (Owners' Equity)
Price to Earnings
(Market Price per Share) / EPS
Dividend Yield
(Dividends per Share) / (Market Price per Share)
Book Value per Share
(Common Share Equity) / (# of Common Shares Outstanding)
Historical cost; Objectivity; Revenue recognition; Matching; Full Disclosure.
Seperate entity; Going concern; Unit of measure & Stable dollar; Periodicity
Cost benefit; Materiality; Conservatism.
Profit drivers
ROE = (Net Profit Margin)(Asset Turnover)(Financial Leverage)
= /\Liabilites + /\SE - /\NonCashAssets
Why record passive investments at LCM?
Relevance: What is the liquidatable value? Measurability: Market value readily available.