Term
| Liquidity Ratio equations |
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Definition
Current = current assets / liabilities
Acid test =
(Cash + marketable securities + receivables)
/ current liabilities |
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Term
| Profitability Ratio Equations |
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Definition
Return on Sales =
Net Income / Net Sales
Return on Equity =
Net profit / total owner equity
Earnings per share =
Net Income after taxes / Number of common shares outstanding |
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Term
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Definition
Inventory turnover =
COGS/ average inventory
Capacity utilization =
capacity being used / total capacity available
Average Collection Period =
Accounts Receivable / average daily credit sales |
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Term
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Definition
Debt to Equity =
Total liabilities / Owner Equity |
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Term
| Short Term Financing includes: |
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Definition
Accounts Payable
Short term Loans + revolving credit
IOU's
Secured Loan (assets pledged) |
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Term
| Long Term Financing includes: |
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Definition
Debt Financing
Equity Financing |
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Term
|
Definition
| Company Borrows, pays interest |
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Term
|
Definition
| Company seeks investors, do not have to pay back capital, only dividends |
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