Accounting 14 ratios

Current Ratio (L)

• Current Assets/Current Liabilities= #:1, higher is better

Receivables Turnover (L)

• Net credit sales/average gross A/R (before AFDA) = times, higher is better

Average Collection Period (L)

• 365 / Receivables Turnover, lower is better, expressed in days

Inventory Turnover (L)

• Cost of Goods Sold / Average Inventory, higher is better, indicating efficient inventory management, expressed in times

Days in Inventory (L)

• 365 / Inventory Turnover, indicating how many days it takes to sell the entire inventory on hand, expressed in days

Working Capital (L)

• Current assets - Current Liability’s, higher is better

Debt to Total Assets (S)

• Total liabilities/total assets, expressed in percent, lower is better

Times Interest Earned (S)

• (net income + interest expense + income tax expense)/interest expense. Higher is better, it shows how 5.3 times that amount of interest owed

Free Cash Flow (S)

• Operating- Net Capital Expenses - Dividends

Gross Profit Margin (P)

• Gross profit/Net sales. Expressed in percent

Profit Margin (P)

• Net Income/Net Sales. Expressed in percent

Asset Turnover (P)

• Net sales/average total assets. Expressed in times , this metric indicates how efficiently a company utilizes its assets to generate sales.

Return on Assets (P)

• Net income/average total assets. Expressed in percent

Return on CSHE (P)

• (Net income - Pref Dividend)/average common shareholder equity. Expressed in percent

Basic EPS (P)

• (Net income - Pref Dividend)/WA#CS. Expressed in percent

Payout Ratio (P)

• Cash Dividend Declared/ Net Income. Expressed in percent , the payout ratio indicates the proportion of earnings distributed to shareholders as dividends, reflecting the company's dividend policy and financial health.