Profitability Ratios
Gross margin is calculated this way.
What is (net sales - cost of goods sold) divided by net sales?
Current assets divided by current liabilities.
What is the current ratio?
Cost of goods sold divided by average inventory.
What is inventory turnover?
Liabilities divided by equity.
What is the debt to equity ratio?
The price of the stock compared to reported earnings per share.
What is the price earnings ratio?
The excess of revenues over expenses.
What is net profit?
A more stringent measure of liquidity than the current ratio.
What is the quick ratio?
The measure of how efficiently an organization uses credit to increase sales.
What is accounts receivable turnover?
The excess of earnings over interest expense.
What is times interest earned?
Market value of equity divided by book value of equity.
What is market to book ratio?
A measure of how effectively shareholder investments are used.
What is return on equity?
The most conservative of all liquidity ratios.
Efficient use of assets to generate sales.
What does asset turnover signify?
An indication that an organization may have to commit too many resources to paying debt.
Why is a high debt ratio risky?
The income returned on an investment.
What is dividend yield?