Ratios & Margins

• How is the current ratio calculated?

  Current assets divided by current liabilities.
• How is the quick ratio calculated?

  Cash & cash equivalents, marketable securities and accounts recieveable divided by current liabilities.
• How is the debt-to-equity ratio calculated?

  Total debts divided by total shareholder's equity.
• How is the debt-to-total assets ratio calculated?

  Total debts divided by total assets.
• How is the gross profit margin calculated?

  Net sales minus cost of goods sold, divided by net sales.
• How is the net profit margin calculated?

  Net profit divided by total revenue.
• How is the earnings-per-share ratio calculated?

  Net income minus preferred dividends, divided by end-of-period common shares outstanding.
• How is the times interest earned ratio calculated?

  Earnings before interest and taxes divided by total interest payable.
• How is the receivables turnover ratio calculated?

  Net credit sales divided by average accounts receivable.
• How is the inventory turnover ratio calculated?

  Cost of goods sold divided by average value of inventory.
• How is the days' sales in inventory ratio calculated?

  Average inventory divided by cost of goods sold, multiplied by 365 days.
• How is the return on stockholders' equity ratio calculated?

  Net income divided by total shareholder's equity.
• What is the current ratio also known as?

  Working capital ratio.
• What is the working capital ratio also known as?

  Current ratio.
• What is the quick ratio also known as?

  Acid-test ratio.
• What is the acid-test ratio also known as?

  Quick ratio.
• What is the difference between the current ratio and quick ratio?

  The quick ratio only includes a business' most liquid assets and does not include inventory.
• What is the times interest earned ratio also known as?

  Interest coverage ratio.
• What is the interest coverage ratio also known as?

  Times interest earned ratio.