Ratio's16 cards

Tagged as: accounting, finance, marketing

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1

Return on total assets

Net income + [Interest expense X (1-Tax Rate)] ---------------------------------------------------- Average total assets

2

Return on common stockholders' equity

Net income - Preferred dividends ---------------------------------------------------- Average common stockholders' equity

3

Average common stockholders' equity

Average total stockholders' equity - Average preferred stock

4

Financial leverage is positive when...

the rate of return on total assets is greater than the rate of return on common stockholders' equity

5

book value per share=

Total stockholders' equity' Preferred stock -------------------------------------------------- Number of common shares outstanding

6

Financial leverage is negative when...

the rate of return on total assets is less than the rate of return on common stockholders' equity

7

Working capital =

Current assets - Current Liabilities

8

Current ratio =

Current assets --------------------------------------------------- Current liabilities

9

Acid-test ratio =

cash + Marketable securities + A/R +Short term notes receivable --------------------------------------------------- Current liabilites


11

Accounts receivable turnover =

Sales on account -------------------------------------------------- Average accounts receivable balance

12

Average collection period

365 days --------------------------------------------------- Accounts receivable turnover

13

Inventory turnover

Cost of goods sold --------------------------------------------------- Average inventory balance

14

Average sale period

365 days --------------------------------------------------- Inventory turnover

15

Times interest earned =

Earnings before interest expense and income taxes --------------------------------------------------- Interest expense

16

Debt-to-equity ratio =

Total liabilities --------------------------------------------------- Stockholders' equity