14 Ratios - Ratio "cheat sheet" 1. Debt Ratio: Total...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Debt Ratio : Total Liabilities/ Total Assets. This tells us how much of a company’s assets are funded by debt rather than equity. 2. Current Ratio : Current Assets/ Current Liabilities. This is an important one and tells us how able a company is to meet its short term obligations or how liquid the company is. 3. Quick Ratio (acid test ): (cash + current investments + A/R)/current liabilities. Also a liquidity ratio that tells us how able to meet short term obligations is. 4. Return on Sales: Net Income/ Sales. This tells us how much of each dollar in revenue/ sales that we have goes to net income. For instance, if you have a Return on Sales of 20%, it means that for every dollar in sales, $.20 is left after expenses are paid. 5. Asset Turnover Ratio: Sales/ Total Assets. This tells us how well a company is utilizing the assets it has to generate revenue. 6. Return on Equity: Net Income/ Total Stockholder’s Equity. This tells investors how much, for each dollar they invest, income is earned. 7.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/02/2011 for the course ACCT 225 taught by Professor Canace during the Spring '08 term at South Carolina.

Ask a homework question - tutors are online