Financial Ratio Analysis

Front 1

Current Ratio

Back 1

Current Assets
/
Current Liabilities

Hint 1

ability to pay short term liabilities from short term assets

Front 2

Quick Ratio (Acid test)

Back 2

(Current assets- Inventory)
/
Current Liabilities

Hint 2

ability to pay Short term liabilities from short term assets excluding inventory

Front 3

Inventory to net working capital

Back 3

Inventory
/
Current Assets-Current Liabilities

Hint 3

A measure of inventory balance.
cushion of excess assets over liabilities could be threatened by loss of inventory

Front 4

Cash ratio

Back 4

(Cash + Cash Equivilents)
/
Current Liabilities

Hint 4

Ability to pay short term liablities in cash or cash equiv.

Front 5

Liquidity Ratios

Back 5

Current Ratio
Quick Ratio
Inventory to net working capital
Cahs ratio

Front 6

Profitability ratios

Back 6

Net Profit margin
gross profit margin
Return on investment
Return on equity
Earnings per share

Front 7

Net profit margin

Back 7

Net profit after taxes
/
Net Sales

Hint 7

How much after tax profits are gnerate by each dollar of sales

Front 8

Gross profit margin

Back 8

(Sales- COGS)/Net Sales

Hint 8

Percentage,
the total margin available to cover other expenses beyond cost of goods sold and still yeild profit.

Front 9

Return on Investment

Back 9

Net Profit after taxes
/
Total assets

Hint 9

Percentage,
Measures rate of return on total assets utilized by company; a measure of management efficiency, shows return of all assets under its control, regardless of source of financing

Front 10

Return on Equity

Back 10

Net profit after taxes
/
Shareholders equity

Hint 10

Percentage,
Measures the rate of return on the book value of shareholders' total investment of the company

Front 11

Earnings per share

Back 11

Net profit after taxes- Perferred stock dividends
/
Average number of common shares

Hint 11

Dollars per share,
Shows the after-tax earnings generated for each share of common stock.

Front 12

ACTIVITY RATIOS

Back 12

Inventory turnover, days of inventory, net working capital turnover, asset turnover, fixed asset turnover, average collection period, accounts receivable turnover, accounts payable period, days of cash.

Front 13

Inventory Turnover

Back 13

Net Sales
/
Inventory

Hint 13

Decimal,
Measures the number of tiems the average inventory of finished goods was tuenred over or soled furnigna a period of time, usually a year.

Front 14

Days of inventory.

Back 14

Inventory
/
(COGS/365)

Hint 14

Days,
Measures the number of one day's worth of inventory that a company has on hand at any given time.

Front 15

Net working capital turnoer

Back 15

Net Sales
/
Net working Capital

Hint 15

Decimal,
Measures how effectively the net working capital is used to generate sales

Front 16

Asset Turnover

Back 16

Sales
/
Total Assets

Hint 16

Decimal,
Measures the utilization of the company's fixed assets (i.e. PPE); Measures how many sales are generate by each dollar of fixed assets

Front 17

Average Collection Period

Back 17

Accounts recievable
/
(Sales for year/365)

Hint 17

Days,
Indicates the average lenght of time in days that company must wait to collect a sale after making it.

Front 18

Accounts recievable turnover

Back 18

Annual Credit Sales
/
Accounts recievable

Hint 18

Decimal
# of times tahat acounts receivable are cycled during the time period.

Front 19

Accounts payable period

Back 19

Accounts Payable
/
(Purchases for year/365)

Hint 19

Days,
Indicates the average length of time in days that a company takes to pay its credit purchases.

Front 20

Days of Cash

Back 20

Cash
/
(net sales for year /365)

Hint 20

Days,
Indicates the number of days in cash on hand at present sales levels

Front 21

Leverage Ratios

Back 21

Debt to asset ratio
Debt to equity ratio
Long term debt to capital structure
Times interest earned
coverage of fixed charges
Current liablities to equity

Front 22

Debt to asset ratio

Back 22

Total Debt
/
Total Assets

Hint 22

Percentage
Measures the extent to which borrowed funds be been used to finance the companys assets

Front 23

Debt to equity Ratio

Back 23

Total Debt
/
Shareholders equity

Hint 23

Percentage
Measures funds provided by creditors vs owners

Front 24

Long term debt to capital structure

Back 24

Long term debt
/
Shareholders' Equity

Hint 24

Percentage,
Mearures the long term component of capital structure

Front 25

Times interest earned

Back 25

(Profit before taxes+ Interest charges)
/
Interest Charges

Hint 25

DecimalIndicates the ability of the company to meet its annual interest costs

Front 26

coverage of fixed charges

Back 26

Profit before taxes + Interest Charges + Lease charges
/
Interest charges + lease obiligations

Hint 26

Decimlal
A mearure of the compnays ability to meet all fixed charge obligations

Front 27

Current liabilities to equity

Back 27

Current Liabilities
/
Shareholders' Equity

Hint 27

Percentage
mearures the shoret term financing protion verses that provded by ownersq

Front 28

Price/Earnings ratio

Back 28

Market price per share
/
Earnings per share

Hint 28

DecimalShows teh current market's evaluation fo stock, based on its earnings; shows how much the investor is willing to pay for each dollar of earning

Front 29

Dividend payout ratio

Back 29

Annual Dividends per share/
Annual Earnings per share

Hint 29

%
indicates the % of profit that is paid out as dividieds

Front 30

Dividend yield on common stock

Back 30

Annual dividends per share/
Current Market price per share.

Hint 30

%
indicates the rate of return to common shareholders at the current market price.