Finance 2

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explain turnover rate

determine how long it takes to sell goods that the company spent upfront to acquire annual sales / total assets

What is the formula of dividend yield?

dividend per share / market share price at the beginning of year

what is the purpose of Activity ratios? And what are the types

how efficiently the company uses its resources - average collection period - average inventory period - turnover rate

explain average inventory period

how long it takes for company to sell their inventory inventory level / Total COGS *365

What is the purpose of EPS

indicated how much money a company makes for each share net profit / total outstanding shares

what is another word for net earnings and what does it mean?

net income, profit after tax and interest

what is the purpose of profitability ratios? And what are the types

the yield of sources of funds -ROE -ROD -ROI

Formula of Debt to Equity ratio

total debt / total equity

Formula for Debt ratio

total debt / total investment

What is the formula of total yield?

(dividend per share + current market price) / market price at the beginning of year

Formula of Times Interest Earned ratio

EBIT / Total Interest Expenses

What is the purpose of the market-to-book ratio? and how to calculate the book value

Helps company compare if its assets value is comparable to the market value of its stock Market value / book value book value: (total equity - preferred stock) / total outstanding shares

what is the purpose of leverage ratios? And what are the types

How heavily the company is financed by debt - Debt Ratio - Debt to Equity Ratio - Times Interest Earned Ratio

What is the purpose and formula of payout ratio?

How much of the earnings is going to be paid out dividends / net income

What is dividend cover and its formula?

It's the opposite of the payout ratio net income / dividend

What are the formula of ROE

Net income / Total Equity the net income : revenue - all expenses (including tax and interest)

What is the formula for ROI?

Net income/ Total Investment

What is the formula and purpose of P/E ratio?

Price per earning market share price / EPS

what is the purpose of liquidity ratios? And what are the types

To measure the ability of company to meet short-term obligations - Current Ratio - Quick Ratio - Net Working Capital

What is the formula for ROD? and purpose?

What debtors receive for lending their money interest expense / total debt

what is the purpose of Valuation ratios? And what are the types

analysis the market value performance of a company - EPS - P/E ratio - Dividend Yield - Total Yield - Payout Ratio - Dividend Cover - Market-to-Book ratio

explain average collection period

average time it takes for a company to get their receivables receivables / annual sales* 365


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