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Financial Ratios
Formulas for ratios used to analyze financial strenght of a company
18
Finance
Undergraduate 3
09/27/2009

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Cards

Term
CURRENT RATIO
Definition
CURRENT ASSETS/CURRENT LIABILITIES
Term
QUICK RATIO
Definition
(CURRENT ASSETS - INVENTORIES)/
CURRENT LIABLILITIES
Term
NET WORKING CAPITAL
Definition
CURRENT ASSETS - (PAYABLES&ACCRUALS)
Term
INVENTORY TURNOVER
Definition
SALES/INVENTORIES
Term
DAYS SALES OUTSTANDING or AVERAGE COLLECTION PERIOD
Definition
RECEIVABLES/(ANNUAL SALES/365, or "SALES PER DAY")
Term
FIXED ASSETS TURNOVER
Definition
SALES/NET FIXED ASSETS
Term
TOTAL ASSETS TURNOVER
Definition
SALES/TOTAL ASSETS
Term
DEBT RATIO or TOTAL DEBT TO TOTAL ASSETS RATIO
Definition
TOTAL DEBT/TOTAL ASSETS
Term
TIMES INTEREST EARNED (TIE)
Definition
EBIT/INTEREST CHARGES
Term
OPERATING MARGIN
Definition
OPERATING INCOME or EBIT/SALES
Term
PROFIT MARGIN
Definition
NET INCOME/SALES
Term
RETURN ON ASSETS or (ROA)
Definition
NET INCOME/TOTAL ASSETS
Term
BASIC EARNING POWER (BEP)
Definition
EBIT/TOTAL ASSETS
Term
RETURN ON EQUITY (ROE)
Definition
NET INCOME/COMMON EQUITY
Term
PRICE/EARNINGS (P/E) RATIO
Definition
MARKET PRICE PER SHARE/EPS
Term
MARKET/BOOK (M/B) RATIO
Definition
MARKET PRICE PER SHARE/BOOK VALUE PER SHARE
Term
BOOK VALUE PER SHARE
Definition
COMMON EQUITY/ # OF COMMON SHARES OUTSTANDING
Term
EARNINGS PER SHARE
Definition
NET INCOME/#COMMON SHARES OUTSTANDING
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