Ratio-Formula-Cheat-Sheet

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Unformatted text preview: this formula uses net fixed assets, not gross) Measures how effective an organization is at using all of its assets to generate sales Used to measure an organization’s ability to pay off its obligations due within 1 year Measures how total current assets compares to total current liabilities – it is the most common measure of short-term liquidity Measures how liquid current assets (i.e. excluding inventory) compare to total current liabilities – it is more conservative than the current ratio Used to measure whether an organization carries an appropriate amount of debt Measures how much of an organization’s assets are financed through debt – a ratio over 1 means 100% or more are financed with debt Measures whether an organization uses more debt or more equity to finance operations – a ratio of over 1 means debt is used more Measures an organization’s ability to make its interest payments by showing how much EBIT exceeds or falls short of interest expense (over 100% m...
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This document was uploaded on 01/24/2014.

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