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Ratios
Accounting ratios
| Question | Answer |
|---|---|
| Current ratio | current assets/current liabilities |
| Quick (acid-test) ratio | current assets - inventory/current liabilities |
| Inventory turnover | cost of goods sold/inventory |
| Average collection period | accounts receivable/average sales per day |
| Average payment period | accounts payable/average purchases per day |
| Total asset turnover | sales/total assets |
| Debt ratio | total liabilities/total assets |
| Times interest earned ratio | earnings before interest and taxes/interest |
| Gross profit margin | gross profits/sales |
| Operating profit margin | operating profits/sales |
| Net profit margin | earnings available for common stockholders/sales |
| Earnings per share (EPS) | earnings available for common stockholders/number of shares of common stock outstanding |
| Return on total assets (ROA) | earnings available for common stockholders/total assets |
| Return on common equity | earnings available for common stockholders/common stock equity |
| Price/earnings (P/E) ratio | Market price per share of common stock/earnings per share |
| Market/book (M/B) ratio | market price per share of common stock/book value per share of common stock |