Term
| Times Interest Earned Ratio |
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Definition
EBIT (or operating profit)
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Annual interest expense
The number of times that interest payments could be covered by operating earnings. |
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Term
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Definition
Total Liabilities
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Total Assets
Measures how leveraged a company is. |
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Term
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Definition
Current Assets
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Current Liabilities
Measure of liquity. Ability to pay back short term debt.
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Term
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Definition
Net Income
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Sales
How much income for each dollar of sales |
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Term
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Definition
Sales
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Total Assets
Measures efficiency. How much in sales for each $ of assets. |
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Term
| Days Purchases in Accounts Payable |
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Definition
Average AP
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(CoGS +Change in Inventory) x 365
Measures average time between purchase and payment to suppliers |
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Term
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Definition
Market Value of Shares
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Net Income
Amount investors are willing to pay for each $ of earnings |
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Term
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Definition
ROE = Profit x Efficiency x Leverage
Profit = Net Income / Sales
Efficiency = Sales / Assets
Leverage = Total Assets / Total Equity |
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Term
| Average Collection Period |
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Definition
Average Accounts Receivable
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Average Daily Sales
Measures average # of days that elapse between sales and cash collection |
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Term
| Number of Days Sales in Inventory |
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Definition
Average Inventory
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Average Daily CoGS
Measures how many days of sales you could make with the on hand inventory |
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Term
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Definition
Sales
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Average Fixed Assets
$ sales generated for the year for each $ of fixed assets |
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