Ratios From Chapter 14 For Financial Accounting Final Exam

Debt to Equity

-Total Liabilities/Stockholders' Equity
-Test of Solvency

Quality of Income

-Cash Flows from Operating Activities/Net Income
-Test of Profitability

Account Analysis

-Doing T-Accounts and keeping track of account balances

Common Size Analysis

-All as percentage of a number from the income statement all over sales
-Vertical analysis
-Each number shown as base figure of the statement

Horizontal Analysis

-"Financial statement technique that shows corresponding changes...over a period of time"
-Trend analysis
-Can do the the values that are absolute and percentage
-Dollar change=amount of item in comparison year- amount of item in base year
-Percentage cha

Gross Profit (Gross Margin)

-Net sales less cost of goods sold

Gross Profit Percentage

-(Gross Profit/Net Sales)X100

Accounts Receivable Turnover Ratio

-Net Credit Sales/Average Net Receivables
-Net Sales/Average Net Trade Receivables
-Test of Liquidity

Current Ratio

-Current Assets/Current Liabilities
-Test of Liquidity

Profit Margin

-Net Income/Net Sales Revenue

Profit Margin Percentage

-(Net Income/Net Sales Revenue)X100
-Test of Profitability