ACCT 211 Test 2 Ratios
Gross Margin Ratio
(Net Sales - Cost of Goods Sold)/Net Sales
Inventory Turnover
Cost of Goods Sold/Average Inventory (Beg. Inv. + End Inv.)/2
Current Ratio
Current Assets/Current Liabilities
Debt Ratio
Evaluates the level of debt risk
Current Ratio
Helps assess the company's ability to pay its debts in the near future
Days' Sales Uncollected
Indicates how much time is likely to pass before we receive cash receipts from credit sales
Acid-Test (Quick) Ratio
Measures a company's likeliness of facing liquidity problems in the near future
Profit Margin
Measures the company's net income to net sales
Return on Assets
Net Income/Average Total Assets
Profit Margin Ratio
Net Income/Net Sales
Gross Margin Ratio
Percentage of dollar sales available to cover expenses and provide a profit
Acid-Test (Quick) Ratio
Quick Assets (Cash + Short Term Investments + Receivables)/Current Liabilities
Days' Sales in Inventory
Reveals how much inventory is available in terms of the number of days' sales
Inventory Turnover
Shows how many times a company turns over its inventory during a period. Indicator of how well management is controlling the amount of inventory available
Debt Ratio
Total Liabilities/Total Assets
Days' Sales Uncollected
[Accounts Receivable/Net Sales] x 365
Days' Sales in Inventory
[Ending Inventory/Cost of Goods Sold] x 365