Financial Accounting Ratios

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Can you name the Financial Accounting Ratios?

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DescriptionRatioCategory
Measure of return on investment based on number of stocks rather than dollar amount
Measure of the safety margin available to meet a company's current liabilities
Measures how much cash a company has on hand relative to their current liabilities
Reflects the relationship between inventory and the value of goods sold
Attempts to measure the sensitivity of a company's stock returns to changes in the market or economy(market risk.) Tries to measure the elasticity of the co's business
Measures cushion of working capital that companies maintain to allow for the inevitable uneveness in flow of funds through the working capital accounts
Related Income earned to the investment made by owners.(Investors expect to earn more if they invest more money)
Measures percentage of each sales dollar that represents profit(not always reliable as it does not consider resources needed to earn income)
Indicated a margin of protection for creditors
Measures the effectiveness of a company in its credit granting and collection activities
DescriptionRatioCategory
Compares sales value with a company's investment in fixed asset(shows how company's utilize fixed assets to generate revenue)
Compared cash generated with cash obligations
Measures the amount of liabilities that exists for each $1 invested by the owners
Improved measure of managements ability to utilize assets effectively.(Not affected by ways in which assets have been financed)
Measures 1+(Liabilities/Equity)
Measured the relationship between the current market price of the stock and its earnings per share
Often used to compare the dividend-paying performance of different investment alternatives.
Measures advantage or disadvantage when company's ROE differs from its ROA.
Evaluates quality of company's earnings(Higher than 1 indicates a high quality as each dollar of income is supported by a dollar of cash flow)

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