Standardization & Basics
These financial statements show each item as a % of total assets or sales.
What are common-size statements?
This ratio is calculated as current assets ÷ current liabilities.
What is the current ratio?
This ratio = cost of goods sold ÷ inventory.
What is inventory turnover?
This ratio shows how much profit is generated per dollar of sales.
What is profit margin?
The DuPont Identity breaks ROE into these 3 components.
What are profit margin, total asset turnover, and equity multiplier?
This type of analysis compares a company to itself over time.
What is time-trend analysis?
This ratio removes inventory from current assets before dividing.
What is the quick ratio (acid test)?
This tells how many days inventory sits before being sold.
What is days’ sales in inventory?
This ratio = net income ÷ total assets.
What is return on assets (ROA)?
This growth rate assumes no external financing is used.
What is the internal growth rate?
This code is used to group similar companies for benchmarking.
What is the SIC (Standard Industrial Classification) code?
This ratio is best for very short-term creditors.
What is the cash ratio?
This ratio = sales ÷ accounts receivable.
What is receivables turnover?
This ratio = net income ÷ total equity.
What is return on equity (ROE)?
This growth rate assumes debt can be used to maintain the capital structure.
What is the sustainable growth rate?
This method compares companies of different sizes in the same industry.
What is peer group analysis?
This ratio shows how many times EBIT can cover interest.
What is the times interest earned ratio?
This ratio = cost of goods sold ÷ accounts payable.
What is payables turnover?
This market-based ratio = price per share ÷ earnings per share.
What is the price-earnings (PE) ratio?
ROE is affected by operating efficiency, asset use efficiency, and this.
What is financial leverage?
Peralta Corp. has total assets of $3,630 and inventory of $422. What % of total assets does inventory represent on a common-size balance sheet?
What is 11.63%?
JP & Friends Inc. has current assets of $708 and inventory of $422. Current liabilities are $548. What is the quick ratio?
What is 0.52?
Mr. Peralta's company has sales are $2,361 and total assets are $3,630. What is the total asset turnover?
What is 0.65?
Josue co. has a market price per share of $115 and a book value per share of $79.55. What is the market-to-book ratio?
What is 1.45?
Peralta company has an ROE of 18.06% and retains 66.67% of its earnings. What is its sustainable growth rate?
What is 13.69%?