# SIE 367

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The flashcards below were created by user driven360 on FreezingBlue Flashcards.

1. §Debt Ratio- This is a measure of
the amount of debt used to finance assets.
= AVG Debt / AVG Assets

•
• Debt excludes Payables
2. §Interest Coverage Ratio- Used by
lending institutions to determine ability to meet loan expenses.
• = EBIT (Earnings Before Interest & Taxes) / Interest
• Expense
3. §Working Capital- Measures a
company’s ability to pay current liabilities.
• = AVG Current Assets – AVG Current
• Liabilities
4. Current Ratio- Illustrates excess
coverage of current assets to pay current debts
• = AVG Current Assets / AVG Current
• Liabilities
5. §Quick Ratio (Acid Test)- Harsh test
to determine ability to pay current obligations
• = (AVG Current Assets – AVG
• Inventory) / AVG Current Liabilities
6. Inventory Turnover- Measures how
frequently inventory is replenished
• = Sales per unit Time / AVG
• Inventory

• Note: Reciprocal is shelf life of
• inventory
7. Accounts Receivable Turnover-
Measures frequency of A/R collection per unit time
• = Sales per unit Time / AVG
• Receivables

• Note: Reciprocal is Receivables
• collection time
8. §Total Assets Turnover- Measures how
well a firm uses it’s assets to produce revenue.
• = Sales per unit Time / AVG Total
• Assets

• Note: Reciprocal is Asset
• Utilization, the time assets are used to produce revenue
9. §Gross Margin- Ratio of Gross Profit
to Sales (%).
= Gross Profit / Sales
10. §Net Margin- Ratio of Net Income to
Sales (%).
= Net Income / Sales
11. §Return on Total Assets- Measures a
company’s utilization of assets to earn a profit.
• ={ (Net Income + (Interest Expense) * (1 –
• Tax rate))} / AVG Total Assets
12. §Return on Equity- Measures the return of
a company per dollar of shareholder equity.
= Net Income / AVG Shareholder Equity
13. Annual Averages of Balance Sheet
values are computed as follows from Monthly Balance Sheets:
summation of 12 month balance sheet value/ 12

### Card Set Information

 Author: driven360 ID: 217878 Filename: SIE 367 Updated: 2013-05-05 20:31:08 Tags: Financial measurements Folders: Description: SIE 367 U OF A Show Answers:

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