Shared Flashcard Set

Details

ACC 221
Ratios
16
Accounting
Undergraduate 2
12/15/2008

Additional Accounting Flashcards

 


 

Cards

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

Supporting users have an ad free experience!