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Common Ratios
ratios
13
Accounting
Undergraduate 2
09/17/2009
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Term
Return On Equity (ROE)
 Definition
Net Income/Equity
Term
Earnings Per Share
 Definition
Net Income/Number of shares outstanding
Term
Price-Earnings ratio
 Definition
Average Market Price/Earnings Per Share
Term
Return on Permanent Capital
 Definition
EBIT(Earnings Before Interest and Tax)/Permanent Capital(noncurrent liabilities + equity)
Term
Gross Margin %
 Definition
gross margin/sales revenue
Term
profit margin %
 Definition
net income/sales revenue
Term
EBIT margin %
 Definition
EBIT/sales revenue
Term
day's sales uncollected
 Definition
accounts receivable/sales revenue divided by 365
Term
inventory turnover
 Definition
cost of sales/inventory
Term
current ratio
 Definition
current assets/current liabilities
Term
quick ratio
 Definition
currest assets - inventory/current liabilities
Term
debt ratio
 Definition
noncurrent liabilities/noncurrent liabilities + equity
Term
capital turnover
 Definition
sales revenue/permanent capital
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