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Principles of Fianance
13 Ratios
13
Finance
Undergraduate 3
02/11/2008
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Term
Profit Margin
 Definition
Net income/Sales
Term
Return on assets
 Definition
Net income/Total assets
Term
Return on equity
 Definition
Net income/Stockholders' equity
Term
Receivables turnover
 Definition
Sales (credits)/Accounts receivable
Term
Average collection period
 Definition
Accounts receivable/Average daily credit sales
Term
Inventory turnover
 Definition
Sales/Inventory
Term
Fixed asset turnover
 Definition
Sales/Fixed assets
Term
Total assest turnover
 Definition
Sales/Total assets
Term
Current ratio
 Definition
Current assets/Current liabilities
Term
Quick ratio
 Definition
(Current assets-inventory)/Current liabilities
Term
Debt to total assets
 Definition
Total debt/Total assets
Term
Times interest earned
 Definition
Income before interest and taxes/Interest\
note: Income before interest and taxes equals operating profit
Term
Fixed charge coverage
 Definition
Income before fixed charges and taxes/Fixed charges
note: Income before fixed charges and taxes equals operating profit plus Lease payments, which is in a footnote on the income statement.
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