Accounting Equations

  1. How do you measure the Quality of Earnings Ratio?
    What does this measure?

    • Net Cash provided by Operating Expenses
    • Net Income
  2. How do you find the Profit Margin Ratio?
    What does this measure?

    • Net Income
    • Net Sales
  3. What measures the percentage of each dollar of sales that results in net income?
    What does the profit margin ratio measure?
  4. How do you determine the Gross Profit Rate?
    What does this measure?

    • Gross Profit
    • Net Sales
  5. What does the gross profit rate measure?
    What uses a percentage to measure the gross profit?
  6. How do you measure Free Cash Flow?
    What does this measure?

    Cash provided by operations - Capital expenditures - Cash dividends
  7. How do you caculate debt to asset ratio?
    What does this measure?

    • Total Liabilities
    • Total Assets
  8. How do you measure debt to assets?
    What measures the percentage of total financing provided by creditors instead of stockholders equity?
  9. How do you find working capital?
    What does this formula show?

    Current Assets - Current Liablities
  10. What is the Current Ratio formula?
    What formula is this?

    • Current Assets
    • Current Liabilities
  11. What does the current ratio masure?
    What ratio is the more predictable measurement of liquidity?
  12. What is the Earnings per Share formula?
    What is this formula?

    • Net Income - Preferred Stock Dividends
    • Average Common Shares Outstanding
  13. How do you calculate the days merchandise is in inventory?
    What does this formula calculate?

    • 365
    • Inventory Ratio
  14. What is the formula for turnover ratio?
    What is this formula?

    • COGS
    • Average Inventory

  15. What measures the number of times the inventory cycles through?
    What does the inventory turnover ratio measure?
Card Set
Accounting Equations
Accounting Equations 1