Details Title: ACC 221 Description: Ratios Total Flash Cards: 16 Created: 12/15/2008 17:43:29		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Accounting Flashcards
Cards in this set: Term Percentage increase Definition (New value - old value)  ÷ old value Term Asset to equity ratio (leverage) Definition assets ÷ equity Term Asset turnover (efficiency) Definition sales ÷ assets Term Return on sales ratio (profitability) Definition net income ÷ sales Term Return on equity ratio Definition net income ÷ total equity     Also =  leverage x efficiency x profitability Term Return on assets Definition net income ÷ assets   Determines how profitable company is before leverage Term working capital Definition current assets - current liabilities     measure of liquidity Term current ratio Definition current assets ÷ current liabilities   measure of liquidity Term quick ratio Definition cash + accounts recievable + marketable securities ÷ current liabilities   measure of liquidity Term number of days in inventory Definition 365 ÷ (cost of sales:inventory)   Shows the average number of days of items in inventory. Term number of days in receivables Definition 365 ÷ (accounts receivable turnover)   Reflects the number of days that receivables are outstanding. Target average or lower. Term cash flow to net income ratio Definition net operating cash flow ÷ net income   Financial ratio used to analyze the cash flow relationship between cash from operations and reported net income; computed as cash from operations divided by net income Term cash flow adequacy ratio Definition operating cash flow ÷ long-term liabilities   should be close to = 1 or higher Term free cash flow Definition net income + depreciation - (changes in working capital) - capital expenditures     Look what RED COMPANY says about this ratio becasue i think they simplified the ratio for your class Term dividend payout ratio Definition dividends ÷ net income Term price-earnings ratio Definition price per share of stock in market ÷ annual earnings per share