Financial Ratios and Concepts

Front

What does the Stock Turnover Ratio indicate?

Back

It shows how many times a business sells and replaces its inventory over a specific period, indicating how efficiently inventory is managed.

Front

What is the formula for Stock Turnover Ratio?

Back

Stock Turnover Ratio = Costo de ventas / Stock promedio

Front

What does the Debtor Days Ratio measure?

Back

It shows the average number of days it takes a business to collect payments from its customers.

Front

What is the formula for Debtor Days Ratio?

Back

Debtor Days = (Cuentas por cobrar / Ingresos por ventas a crédito) × 365

Front

What does the Creditor Days Ratio measure?

Back

It shows the average number of days a business takes to pay its suppliers.

Front

What is the formula for Creditor Days Ratio?

Back

Creditor Days = (Cuentas por pagar / Costo de ventas) × 365

Front

What does the Gearing Ratio indicate?

Back

It shows the proportion of a company’s capital that comes from debt, measuring financial risk.

Front

What is the formula for Gearing Ratio?

Back

Gearing Ratio = (Pasivos no corrientes / Capital empleado) × 100

Front

What is insolvency?

Back

The financial condition of not being able to pay debts.

Front

What is bankruptcy?

Back

The legal process that may follow insolvency.