Financial Ratios

Cash Ratio

- The cash ratio is generally a more conservative look at a company's ability to cover its liabilities than many other liquidity ratios. - calculates a company's ability to repay its short-term debt = cash and cash equivalents / current liabilities.

Accounts Payable Turnover Ratio

365 * average accounts payable / cost of goods sold

Receivables Turnover Ratio

An accounting measure used to quantify a firm's effectiveness in extending credit and in collecting debts on that credit. The receivables turnover ratio is an activity ratio measuring how efficiently a firm uses its assets. 365 * accounts net receivable / net credit sales

working capital turnover ratio

The working capital turnover ratio is used to analyze the relationship between the money that funds operations and the sales generated from these operations. indicates a company's effectiveness in using its working capital. = sales / average amount of working capital

Working capital

Working capital is a measure of both a company's efficiency and its short-term financial health. = Current assets-Current liabilities

Days Sales Of Inventory

average number of days to sell inventory It is a financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory into sales = 365* average inventory /cost of goods sold

operating cycle

inventory conversion period + receivables collections period

Quick ratio - Acid-test ratio

is a measure of how well a company can meet its short-term financial liabilities. (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.

Operating cash flow ratio

measure of how well current liabilities are covered by the cash flow generated from a company's operations. The operating cash flow ratio can gauge a company's liquidity in the short term. = cash flow from operations/current liabilities

Cash Conversion Cycle

that it takes for a company to convert resource inputs into cash flows. inventory conversion period+receivables collection period-payables deferral period

Current Ratio

that measures a company's ability to pay short-term and long-term obligations = Current assets/Current liabilities