Chapter 15 Ratios (1).docx - Liquidity and Solvency Hustle...

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Unformatted text preview: Liquidity and Solvency Hustle: Profilabiity Measures Working Capital Current Ratio IIlluiclr Ratio Acoounts Receivable Turnover Numbers of Days'Sales in Receivables InventoryTurnover Number of Days“ Sales in Inventory Ratio of Fixed Assets to Long-Term Liabilities Ratio of IJ'aloilities to Stockholders' Equity Number of Times Interest Charges Are Eamed Number ofTImes Preferred Dividends Are Earned Ratio of Sales to Assets Rate Earned on Total Assets Rate Earned on Stockholders' Equity Rate Earned on Common Stockholders' Equity Earnings per Share {EPS} on Common Stock. Price-Earnings {PIE} Ratio Dividends per Share hinia-Inna-l Vial-J Mothod of Computation Current Assets — Current Liabilities Current Assets Current Liabilities Quick Assets Current Liabilities Sales Average Accounts Receivable Average Accounts Receivable Average Dain Sales Cost of Goods Sold Average Inventory Average Inventory Average Daily Cost of lGoods Sold Fixed Assets inet} Long-Term Liabilities Total Liabilities Total Stockholders“ Equity Income Before Inoome Tax + Interest Expense Interest Expense Net Income Preferred Dividends Sales Average Total Assets {excluding long-term investments] Net Income + Interest Expense Average Total Assets Net Income Average Total Stockholders’Equity Net Income — Preferred Dividends Average Common Stockholders Equity Net Income — Preferred Dividends Shares of Common StockCiutstanding Market Price per Share of Common Stock Earnings per Share on Common Stock Dividends on Common Stock Shares of Common Stock Dutstandi ng Dividends per Share ofCommon Stock Uso To indicate the ability to meet currently maturing obligations {measu res solvency] To indicate instant debt-paying ability {measures solvency} To assess the efficiency in collecting receivables and in the management ofcredit {measures liquidity} To assess the efficiency in the management of inventory {measures liq uid ityi To indicate the margin of safety to long-term creditors {measures solvency} To indicate the margin of safety to creditors [measures solvency} To assess the risk to debtholders in terms of number of times interest charges were earned {measures solvency} To assess the risk to preferred stockholders in terms of the number of times preferred dividends were earned {measures solvency} To assess the effectiveness in the use of assets To assess the profitability of the assets To assess the profitability of the investment by stockholders To assess the profitability of the investment by common stockholders To indicate future earnings prospects, based on the relationship between market value of common stock and earnings To indicate the extent to which earnings are being distributed to common stockholders To indicate the rate of return to common ...
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