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j401 quiz 1 accounting
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Liquidity ratios- can the firm meet its maturing obligations as the come due
Current Ratio- measures solvency by showing the firm's ability to pay current liabilities out of current assets
Quick Ratio- Shows the extent to which a firm's most liquid assets cover its current liabilities
Net Working Capital- an expression of how much in liquid assets a firm currently has
Current ratio
= current assets/ current liabilities
Quick Ratio
(current assets- inventory)/ current liabilities
Net Working Capital
current assets-current liabilities
Capital structure ratios- Can the firm repay loans (vulnerability to risk)
Debt to Equity- ratio of capital invested by owners vs funds provided by lenders
Debt to Assets- shows how well a firm can cover total debt with all assets
Current Debt to Total Debt- shows what proportion of the firm's total debt is current
Debt to Equity
total liabilities/stockholder's equity
Debt to Assets
total liabilities/total assets
Current Debt to Total Debt
Current liabilities/ total liabilities
Performance Ratios- How well is the firm performing on (some) standard financial metric
Gross Profit Margin- how much profit is earned on product without selling and administration cost.
COGS- percentage of sales uesed to pay expenses which vary directly with sales
Net Profit- profit comes from every dollar of sale
ROA- how effective assets are used to generate a return
ROE- determines the rate of return on stockholder's investment
Gross Profit Margin
Gross profit/ sales
COGS to Sales
COGS/ sales
Net Profit of sale
net profit/ sales
ROA
net profit/ total assets
ROE (RR net worth)
net profit/ SE
Activity Ratios- how efficiently is the firm operating
Inventory turn- number of times inventory turnover during the year
inventory days- average number of day to sell inventory
A/R turn- number of times that accounts receivables turnover during the year
A/R day- turnover in days
FAX- how efficiently the business generates sales in each dollar of fixed assets
TaX- business generates sales on each dollar of assets
Inv turn
Inv Days
Inv turn= COGS/Inv
Inv days=365/ Inv. turn
A/R turn
A/R days
A/R turn= sales/ AR
A/R days= 365/AR turn
FAX
TAX
FAX= sale/NFA
TAX=sales/total assets
Author:
Cshowalter
ID:
314886
Card Set:
j401 quiz 1 accounting
Updated:
2016-01-28 16:55:34
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