Financial Accounting Ratios

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Can you name the Financial Accounting Ratios?

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

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