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ADMS 2500 Study Guide - Earnings Before Interest And Taxes, Net Income

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violeteel391
29 Mar 2014
School
York University
Department
Administrative Studies
Course
ADMS 2500
Professor
all

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ADMS 2500 Full Course Notes
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ADMS 2500 Full Course Notes
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Document Summary

Equity ratio = common shareholders" equity / total assets. Preferred dividend coverage = operating income / (bond interest + preferred. Inventory turnover = cost of sales / average inventory. Average collection period = (trade accounts receivable / sales) * 365. Return on assets = operating income / total average assets. Return on common shareholders equity = (net income preferred dividend. Return on sales = net income / net sales. Earnings per share = (net income preferred div. Price earnings ratio = market price of common share / eps. Dividend yield = dividends per share / market price per share.

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Related Questions

Using the 10K https://www.chevron.com/-/media/chevron/annual-report/2016/2016-Annual-Report.pdf

Find the following ratios for Chevron for 2015

Current Ratio

Current Ratio = Current Assets / Current Liabilities

Quick Ratio

Quick ratio = (current assets – inventories) / current liabilities

Return on Equity

Return on Equity = Net Income/Shareholder's Equity

Debt-to-Equity Ratio

Debt - Equity Ratio = Total Liabilities / Shareholders' Equity

Inventory Turnover

Inventory Turnover= Sales/ Average Inventory

Earning per share

Earning per share= (Net Income -Dividends on Preferred Stocks)/ Average Outstanding Shares

Gross Margin

Gross Margin= (Revenue-Cost of Goods Sold)/Revenue

Price earning Ratio

Price earning Ratio= Market Value per Share / Earnings per Share

Return on Assets

Return on Assets= Net Income/Total Assets

Times Interest Earned

Times Interest Earned= EBIT/Total interest payable on bonds and other contractual debt.

E13-5 Matching Each Ratio with Its Computational Formula LO 13-4, 13-5, 13-6, 13-7
Match each definition with its related ratios or percentages by selecting the appropriate letter in the drop down provided.
Definitions: Ratios or Percentages Definitions
A. Net Income (before extraordinary items) ÷ Net Sales 1 Profit margin
B. Days in Year ÷ Receivable Turnover ratio 2 Inventory turnover ratio
C. Net Income ÷ Average Stockholders’ Equity 3 Average collection period
D. Net Income ÷ Average Number of Shares of Common Stock Outstanding 4 Dividend yield ratio
E. Return on Equity − Return on Assets 5 Return on equity
F. Quick Assets ÷ Current Liabilities 6 Current ratio
G. Current Assets ÷ Current Liabilities 7 Debt-to-equity ratio
H. Cost of Goods Sold ÷ Average Inventory 8 Price/earnings ratio
I. Net Credit Sales ÷ Average Net Receivables 9 Financial leverage percentage E
J. Days in Year ÷ Inventory Turnover Ratio 10 Receivable turnover ratio
K. Total Liabilities ÷ Stockholders’ Equity 11 Average days’ supply of inventory
L. Dividends per Share ÷ Market Price per Share 12 Earnings per share
M. Market Price per Share ÷ Earnings per Share 13 Return on assets
N. [Net Income + Interest Expense (net of tax)] ÷ Average Total Assets 14 Quick ratio
O. Cash from Operating Activities (before interest and taxes) ÷ Interest Paid 15 Times interest earned
P. Net Sales Revenue ÷ Net Fixed Assets 16 Cash coverage ratio
Q. (Net Income + Interest Expense + Income Tax Expense) ÷ Interest Expense 17 Fixed asset turnover ratio

Calculate and discuss the importance of the following ratios:

Liquidity Ratios—working capital, current ratio, quick/acid-test ratio, receivable turnover, average day's sales uncollected, inventory turnover, average day's inventory on hand, operating cycle

Profitability Ratios—profit margin, asset turnover, return on assets, debt-to-equity ratio, return on equity

Long-term Solvency Ratios—debt-to-equity ratio, debt to total assets, times interest earned, cash debt coverage

Cash Flow Ratios—cash flow yield, cash flows to sales, cash flows to assets, free cash flow

Market Strength Ratios—Earnings per share, price-earnings per share, payout ratio, book value per share