Corporate Finance Chp4

Liquidity

Availability of resources to meet short-term cash requirements.

Current Ratio

Is a liquidity test = current assets/ current liabilities

Quick Ratio

Is a Liquidity Test = current assets - inventory/ current liabilities

Assets Management Ratios

Inventory TO, Fixed asset turnover, total assets turnover, DSO

DSO ( Days Sales Outstanding)

Accounts Receivables/ average sales per day

Inventory TO Ratio

COGS/ Average Inventory

Fixed Assets Turnover Ratio

Sales/ Net fixed Assets

Total Assets Turnover Ratio

Sales/ Total Assets

Profitability Ratios

Operating Margin, Profit Margin, ROA, ROE, BEP, ROIC

Operating Margin

EBIT/ Sales

Profit Margin

Net Income/ Sales

ROA (Return on Assets)

Net Income/ Total Assets

ROE (Return on Common Equity)

Net Income/ Common Equity

BEP ( Basic Earning Power)

EBIT/ Total Assets

ROIC (Return On Invested Capital)