Financial Ratios

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= 365 days in the year DIVIDED BY the accounts receivable turnover

# of Days for AR receivable

= 365 days DIVIDED BY the inventory turnover

# of days sales in Inventory

= Net income (After tax) / Avg Stockholder equity

After-Tax Return

A balance sheet which reports percentages of total assets instead of dollar amounts is referred to as a __________-__________ balance sheet

Common Size

Which of the following are likely to have the reported amounts on the balance sheet being close to their current value? Current Assets Long-term Assets Stockholders' Equity

Current Assets

= current assets DIVIDED BY current liabilities

Current Ratio

Current assets DIVIDED BY current liabilities is the Current Ratio Net Worth Ratio Working Capital

Current Ratio

= (Total Liabilities / Total Equities) : 1

Debt-To-Equity Ratio

A corporation's excellent reputation will be listed among the corporation's assets on its balance sheet. True False

F

The current market value of a corporation is approximately the amount reported on the balance sheet as stockholders' equity. True False

F

Free cash flow is the cash provided by operating activities minus the cash used by financing activities. True False

F Free cash flow is cash provided by operating activities minus capital expenditures.

Which of the following is not a current asset? Inventory Prepaid Insurance Fixtures

Fixtures

The quick ratio EXCLUDES which of the following? Accounts Receivable Inventory Cash

Inventory

The quality of a company's earnings are suspect when the company's net income is more than the cash flow from which activities? Operating Investing Financing

Operating

= [(Cash + Temporary Investments + Accounts Receivable) DIVIDED BY current liabilities] :

Quick Ratio (Acid test)

= Credit Sales DIVIDED BY average Accounts Receivable.

The accounts receivable turnover

= Cost of Goods Sold DIVIDED BY average Inventory.

The inventory turnover

= Earnings + interest expense + Income tax / interest expense

Times Interest Earned

Current asset MINUS current liabilities is the Current Ratio Net Worth Working Capital

Working Capital


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