accounting ratios

Receivables Turnover Ratio

= net credit sales/average net accounts receivable

higher is better

Average Collection Period

= 365 days/receivables turnover ratio

lower is better

Inventory Turnover Ratio

= COGS/average inventory

higher is better

Average Days in Inventory

= 365 days/inventory turnover ratio

lower is better

Gross Profit Ratio

= gross profit/net sales

higher is better

Return on Assets

= Net income/ Average Total Assets

higher is more profitable

Profit Margin

= net income/net sales

higher is more profitable

Asset Turnover

= net sales/ average total assets

Cash Holdings Ratio

= cash + cash equivalents/ total assets

Investments to Assets Ratio

= short term investments + long term investments/ total assets

Return on Investments Ratio

= investment related income (loss)/ avg. short term investments + avg. long term investments

Current Ratio

= Current Assets/ Current Liabilities

higher is more liquid

Debt to Assets Ratio

= Total Liabilities/ Total Assets

lower is more solvent

Earnings Per Share

= Net Income - Preferred Share Dividends/ Weighted-Average Common Shares Outstanding

Price-Earnings Ratio

= Stock Price/ Earnings Per Share

higher is better

Working Capital

= current assets - current liabilities

Acid Test Ratio

= cash + current investments + accounts receivable / current liabilities 

Debt to Equity Ratio

= total interest-bearing debt / stockholders’ equity

lower is better

Times Interest Earned Ratio

= net income + interest expense + tax expense / interest expense

higher is better

Dividend Yield

= dividends per share/ stock price

Free Cash Flows

= operating cash flows - capital expenditures

Equity Multiplier

= average total assets/ average total equity

Return on Equity

= net income/ average stockholders’ equity

higher is better

Dupont Framework

Return on Equity = Profit Margin x Asset Turnover x Equity Multiplier