Match each ratio or percentage with itscomputation. Ratios or Percentages Definitions 1. Profit margin 2. Inventory turnover
Question:
Ratios or Percentages Definitions 1. Profit margin 2. Inventory turnover ratio 3. Average collection period 4. Dividend yield ratio 5. Return on equity A. Net Income (before extraordinary items) = Net Sales B. Days in Year + Receivable Turnover Ratio C. Net Income + Average Stockholders' Equity D. Net Income + Average Number of Shares of Common Stock Outstanding E. Return on Equity – Return on Assets F. Quick Assets + Current Liabilities G. Current Assets ÷ Current Liabilities H. Cost of Goods Sold + Average Inventory I. Net Credit Sales Average Net Receivables J. Days in Year Inventory Turnover Ratio K. Total Liabilities Stockholders' Equity L. Dividends per Share + Market Price per Share M. Current Market Price per Share Earnings per Share N. [Net Income + Interest Expense (net of tax)] + Average 6. Current ratio 7. Debt-to-equity ratio 8. Price/earnings ratio 9. Financial leverage percentage 10. Receivable turnover ratio 11. Average days' supply of inventory 12. Earnings per share 13. Return on assets 14. Quick ratio 15. Times interest earned 16. Cash coverage ratio Total Assets 17. Fixed asset turnover ratio O. Cash from Operating Activities (before interest and taxes) + Interest Paid P. Net Sales Revenue + Net Fixed Assets Q. (Net Income + Interest Expense + Income Tax Expense) + Interest Expense
Step by Step Answer:
1 A Profit margin 2 H Inventory turnover ratio 3 B Average days to collect 4 L Dividend yield ra...View the full answer
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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