Textbook Notes (270,000)

CA (160,000)

UTSG (10,000)

Rotman Commerce (1,000)

RSM100Y1 (400)

John Oesch (200)

Chapter Appendix

Department

Rotman CommerceCourse Code

RSM100Y1Professor

John OeschChapter

AppendixThis

**preview**shows half of the first page. to view the full**3 pages of the document.**Major Categories of Financial Ratios

Category Ratio Description

Liquidity

ratios

Current ratio

Quick (acid-test) ratio

Current assets divided by current liabilities

Current assets (minus inventory) divided by current liabilities

Efficiency

ratios

Inventory turnover

Receivables turnover

Total asset turnover

Cost of goods sold divided by average inventory

Credit sales divided by average accounts receivable

Revenue or sales divided by average total assets

Leverage

ratios

Debt ratio

Long-term debt to equity

Total liabilities divided by total assets

Long-term debt divided by owners’ equity

Profitabilit

y ratios

Gross profit margin

Net profit margin

Return on equity

Gross profit divided by revenue or sales

Net profit divided by revenue or sales

Net profit divided by average owners’ equity

Current ratio =Current assets

Current liabilities

Acid-test ratio =Current assets - Inventory

Current liabilities

Inventory turnover =Cost of goods sold

Average inventory

Receivables turnover =Credit sales

Average accounts receivable

Total asset turnover =Sales

Average total assets

Gross profit margin =Gross profit

Sales

Net profit margin =Net income

Sales

Return on equity =Net income

Average equity

Debt ratio =Total liabilities

Total assets

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