Financial Ratio Analysis: Solvency, Profitability and Operational Efficiency Metrics

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Finance - Personal Finance

georgepetenjk Created by 10 mon ago

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The solvency ratio that measures the proportion of a company's assets financed by debt is calculated as Total Liabilities / Total Assets. This ratio is known as the _____ ratio.

The ratio that indicates how many times a company can cover its interest obligations with its earnings before interest and taxes is calculated as (Net income + Interest expense + Income Tax Expense) / Interest Expense. This is known as the _____ ratio.

The measure of a company's financial flexibility, calculated as Net cash provided (used) by operating activities - Net capital Expenditures - Dividends paid, is referred to as _____ cash flow.

The profitability ratio that shows the percentage of sales that exceeds the cost of goods sold, calculated as Gross Profit / Sales, is known as the _____ margin.

The profitability ratio that measures the percentage of net income generated from sales, calculated as Net income / Sales, is referred to as the _____ margin.

The ratio that measures how efficiently a company uses its assets to generate sales, calculated as Sales / Average Total Assets, is known as the _____ turnover.

The profitability ratio that indicates how effectively a company uses its assets to generate net income, calculated as Net Income / Average Total Assets, is called the return on _____.

The profitability ratio that measures the return on equity for common shareholders, calculated as (Net Income - Preferred Dividends) / Average Common Shareholder Equity, is known as the return on _____ Shareholders' Equity.

To calculate Common Shareholders' Equity, subtract Preferred Shares from Total Shareholders' equity. The formula is: Total Shareholders' equity - _____ Shares.

The profitability ratio that measures the earnings available to common shareholders per share, calculated as (Net Income - Preferred Dividends) / Weighted Average Number of Common Shares, is known as _____ Earnings Per Share.

The ratio that compares the market price per share to the earnings per share, calculated as Market Price Per Share / Basic Earnings Per Share, is known as the _____ ratio.

The ratio that indicates the proportion of earnings paid out as dividends to shareholders, calculated as Cash Dividends Declared / Net income, is referred to as the _____ ratio.

The profitability ratio that measures the dividend income relative to the market price per share, calculated as Dividends Declared Per Share / Market Price Per Share, is known as the _____ Yield.

The liquidity measure that indicates the short-term financial health of a company, calculated as Current Assets - Current Liabilities, is known as _____ Capital.

The liquidity ratio that measures a company's ability to pay short-term obligations, calculated as Current Assets / Current Liabilities, is referred to as the _____ Ratio.

The liquidity ratio that measures how efficiently a company collects its receivables, calculated as Credit Sales / Average Gross Accounts Receivable, is known as the _____ Turnover.

The liquidity measure that indicates the average number of days it takes to collect receivables, calculated as 365 Days / Receivables Turnover, is known as the _____ Collection Period.

The liquidity ratio that measures how many times a company's inventory is sold and replaced over a period, calculated as Cost of Goods Sold / Average Inventory, is referred to as the _____ Turnover.

The liquidity measure that indicates the average number of days inventory is held before being sold, calculated as 365 Days / Inventory Turnover, is known as the Days in _____ .

The horizontal analysis that measures the percentage change from a base period, calculated as Analysis-Period amount / base-period amount, is known as the horizontal percentage of _____-period amount.

The horizontal analysis that measures the percentage change over a period, calculated as (Analysis Period Amount - Prior Period Amount) / Prior Period Amount, is known as the horizontal percentage change for _____ .

The vertical analysis that measures the proportion of an item relative to a base amount, calculated as analysis amount / base amount, is known as the vertical percentage of _____ amount.

Liquidity ratios measure the short-term ability of a company to pay its maturing obligations and meet unexpected cash needs. This concept is expanded with supporting explanations and examples. The primary focus of liquidity ratios is to assess a company's _____ .

Solvency ratios measure a company's ability to survive over a long period and pay its total liabilities. This concept is expanded with supporting explanations and examples. The primary focus of solvency ratios is to assess a company's _____ .

Profitability ratios measure the operating success of a company for a specific period. This concept is expanded with supporting explanations and examples. The primary focus of profitability ratios is to assess a company's _____ .

Net income is calculated as total Revenues minus total Expenses. This fundamental accounting equation is represented as: total Revenues - total Expenses = _____ .

The Cost of Goods Sold (COGS) is calculated as beginning inventory plus purchases minus ending inventory. This equation is represented as: beginning inventory + purchases - ending inventory = _____ .

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Financial Ratio Analysis: Solvency, Profitability and Operational Efficiency Metrics

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