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The flashcards below were created by user pthompson122 on FreezingBlue Flashcards.

  1. current ratio purpose and ratio
    • evaluating the ability to pay current liabilities
    • = current assets/ current liabilities
  2. acid test ratio purpose and ratio
    • shows ability to pay all liabilities if they came due immediately
    • = (cash+short term investments+net current receivables)/ current liabilities 
  3. inventory turnover def and ratio
    • indicates salability of inventory 
    • = cost of goods sold/ average inventory
  4. days in inventory def and equation
    • the average number of days inventory is held by the company
    • = 365/ inventory turnover ratio
  5. gross profit percentage def and ratio
    • measures the profitability of each sales dollar above cost of goods sold
    • = gross profit/net sales
  6. accounts receivable turnover def and ratio
    • measures ability to collect cash from customers 
    • = net credit card sales/ average net accounts receivable
  7. days sales and receivables def and ratio
    • shows how many days a sale remains in accounts receivable 
    • =365/ accounts receivable turnover ratio
  8. debt ratio def and ratio
    • evaluates ability to pay long term debt
    • = total liability / total assets
  9. debt to equity ratio and definition
    • indicates the ratio of debt financing relative to equity financing
    • = total liabilities/ total equity
  10. times interest earned ratio and definition
    • measures number of times EBIT can cover interest expense
    • = EBIT/ interest expense 
  11. rate of return on net income def and ratio
    • measures profitability
    • =net income/ net sales 
  12. rate of return on total assets def and ratio
    • measures how profitably a company uses its assets
    • = (net income+interest expense)/ average total assets
  13. asset turnover ratio def and ratio
    • measures the amount of net sales generated for each average dollar of total assets invested
    • = net sales/ average total assets
  14. rate of return on common stock holders equity ratio and definition
    • gauges how much income is earned for each individual dollar invested by the common shareholder 
    • = (net income - preferred dividends)/ average common stock holder equity)
  15. earnings per share of common stock ratio and def
    • gives the amount of income earned for each share of the companies outstanding common stock
    • = (net income- preferred dividends)/ # of shares of common stock outstanding
  16. price/ earnings ratio def and ratio
    • indicates the market price of $1 of earnings
    • =market price per share of common stock/ earnings per share
  17. dividend yield ratio and definition 
    • measures the percentage of a stocks market value that is returned annually as dividends to stockholders
    • = annual dividends per share of common stock/ market price per share of common stock
  18. dividend payout ratio and definition
    • measures the percentage of earnings paid to the common shareholders as cash dividends
    • = annual dividends per share/ earnings per share
  19. book value per share of common stock definition and ratio
    • indicates the recorded net equity amount from the balance sheet for each share of common stock
    • = (total stockholders equity - preferred stock)/ number of shares common outstanding

Card Set Information

2013-01-29 22:24:57

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