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22 Cards in this Set
- Front
- Back
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Liquidity
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Indicate a firm's ability to pay its bills in the short run
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Asset Management
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shows how the company uses its resources to generate revenue, profit and to avoid cost
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Debt Management
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shows how effectively the firm has used borrowed funds and whether or not it has a high amount of leverage
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Profitability
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allows assessment of the company's ability to make money
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Current Ratio
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Current Assets/Current Liabilities
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Quick Ratio
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CA - INV / CL
Measures liquidity without considering inventory |
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Average Collection Period
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Accounts Rec/Average Daily Sales
-Time it takes to collect on credit sales |
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Inventory Turnover at cost
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COGS/INV
- Measures how many times a year the firm uses up an average stock of goods |
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Days Sales in Inventory
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365/inventory turns
-Measures how many days sales are being carried in inventory |
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Fixed Asset Turnover
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Sales/FA (Net)
-Appropriate in industries where significant equipment is required to do business |
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Total Asset turnover
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Sales/Total Assets
Long-term measure of performance |
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Debt Ratio
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LT Debt + CL/ Total Assets
-Need to determine if the company isn't using so much debt that it is assuming excessive risk |
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Debt-to-Equity Ratio
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LT Debt/Common Equity
Measures the mix of debt and equity within the firm's total capital |
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Times Interest Earned
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EBIT/Interest Expense
-Reflects how much EBIT covers interest expense |
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Cash Coverage
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EBIT + depr/Interest Expense
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Gross Profit Margin
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(Sales - COGS) / Sales
- Measures ability to premium price or produce for less than competitors |
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Return on Sales
Profit Margin Net Profit Margin |
Net Income / Sales
Measures control of the income statement: revenue, cost and expense |
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Return on Assets
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Net Income / Total Assets
Measures overall ability of the firm to utilize the assets in which it has invested to earn a profit |
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Return on Equity
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Net Income / SE
Measures return on the owner's capital |
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Price/Earnings Ratio
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Current Stock Price / Earnings Per Share
-An indication of the value the stock market places on a company |
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Market-to-book Value Ratio
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Current Stock price / book value per share
Value greater than 1 means intangibles are valuable Value less than one means worth more dead than alive |
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Du Pont ROE
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(Net income/SE) X ( Sales/Sales) X (Total Assets/Total Liabilities)
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