Defined financial ratios:



Defined financial ratios:

Current ratio = current assets/current liabilities

Working capital = Current assets – current liabilities

Quick ratio = (Cash + marketable securities + accounts receivable)/Current liabilities

Total debt-to-total assets ratio = total liabilities/total assets

Assets to equity ratio = total assets/total owners’ equity

Debt to equity = total liabilities/total owners' equity

Long-term debt-to-equity ratio = long-term debt/Owners’ equity

Long term debt to total capital ratio = Long term debt/(total owners' equity + long-term debt)

Times-interest-earned ratio = (Net income before income tax + interest expense)/Interest expense

Inventory turnover ratio = Cost of goods sold for the period/Average inventory held for the period

Receivables turnover ratio = Net (credit) sales for the period/Average receivables balance for the period

Note: Use total sales if credit sales not available

Noncurrent asset turnover ratio = Net sales for the period/Average noncurrent asset balance for the period

Return on assets = net income after taxes/Average total assets

Return on equity = Net income after tax/Average owners’ equity

Gross profit (margin) = (Net sales – cost of goods sold)

Gross profit (margin) percentage = (Net sales – cost of goods sold)/Net sales

Return on sales = Net income after tax/Net sales

Earning per share (EPS) = Net income after tax /(Average number of shares outstanding)

Price - earnings ratio = Market price per share of common stock /(Earnings per share of common stock)

Dividend yield ratio = Common dividends per share/(market price per share)

Dividend payout ratio = Common dividends per share/ (Earnings per share)

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