financial ratios

  1. liquidity ratios
    current ratio, quick ratio
  2. current ratio
    want a ratio above one, current assets/current liabilities
  3. quick ratio
    less liquid because it does not include inventory. current assets-inventory/current liabilities
  4. working capital ratios
    days sales outstanding, aging of accounts receivable, inventory turnover
  5. days of sales outstanding
    annual revenue/365 = average revenue per day. accounts receivable/average revenue per day = days sales outstanding.
  6. aging of accounts receivable
    listing by category of how long the company has been waiting for its customers to pay bills
  7. inventory turnover
    cost of goods sold/average inventory
  8. gross margin
    gross profit/revenues
  9. operating margin
    operating income/revenue
  10. net margin
    net income/revenues
  11. return on assets
    net income/assets
  12. return on equity
    net income/stock equity = return on equity
  13. debt/equity
    debt over equity
  14. interest coverage ratio
    operating earnings (EBIT) / interest expense
Card Set
financial ratios