CH11 Financial Statement Analysis Ratios

Front

Financial statement analysis ratios are grouped into how many categories?

Back

Four categories: Liquidity, Activity, Profitability, Debt or Financial leverage.

Front

Liquidity measure includes:

Back

Measures of working capital, current ratio, and acid-test ratio.

Front

Formula for working capital:

Back

Working capital = Current A - Current L

Front

Formula for the current ratio:

Back

Current ratio = Current A / Current L

Front

Formula for the acid-test ratio:

Back

Acid-test ratio = (Cash + Acct Rec.) / Current L

Front

Acid-test ratio excludes:

Back

Inventories and other nonliquid current assets.

Front

Impact of efficient use of assets on the firm’s ROI

Back

Efficient use of assets impacts the firm's Return on Investment (ROI) by improving the relationship between asset levels and sales.

Front

Formula for Total Asset Turnover

Back

Front

Variations in Turnover Calculations

Back

Turnover calculations can vary for accounts receivable, plant and equipment, and total operating assets.

Front

Formula for Inventory Turnover

Back