financial ratios clicker quiz. what is this ratio? market price per share earnings per share a....
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Financial Ratios Financial Ratios
Clicker Quiz
What is this ratio?What is this ratio?
Market Price Per Share Earnings Per Share
A. Inventory TurnoverB. Accounts Receivable TurnoverC. Price Earnings RatioD. Debt to Equity
Price Earnings RatioPrice Earnings Ratio
Public’s confidence in the future growth of the company
What is this ratio?What is this ratio?
Total LiabilitiesStockholder’s Equity
A. Inventory TurnoverB. Accounts Receivable TurnoverC. Price Earnings RatioD. Debt to Equity
Debt to Equity RatioDebt to Equity Ratio
Proportions of debt to equityStockholders like it more than 1 since
they will have more controlCreditors would like it less than 1 since
the company is financed more by owners than creditors
What is this ratio?What is this ratio?
Cost of Goods SoldAverage inventory
A. Inventory TurnoverB. Accounts Receivable TurnoverC. Price Earnings RatioD. Debt to Equity
Inventory TurnoverInventory Turnover
How many times inventory has been bought and sold during the year.
4.0 Times would mean it is sold once a quarter. 12 times is once a month
What is this ratio?What is this ratio?
Sales on AccountAverage Accounts Receivable
A. Inventory TurnoverB. Accounts Receivable TurnoverC. Price Earnings RatioD. Debt to Equity
Accounts Receivable TurnoverAccounts Receivable Turnover
How many times a company converts its receivables into cash each year.
52 times would be once a week – 7 days
What ratio is this?What ratio is this?
Dividends Per ShareMarket Price Per Share
A. Return on AssetsB. Dividend PayoutC. Return on EquityD. Dividend Yield
Dividend Yield RatioDividend Yield Ratio
Return (dividends) on current market price of the stock
What is the ratio?What is the ratio?
Dividends Per ShareEarnings Per Share
A. Return on AssetsB. Dividend PayoutC. Return on EquityD. Dividend Yield
Dividend Payout RatioDividend Payout Ratio
Portion of current earnings being paid out in dividends. Investors for dividends want this to be a large %. Investors seeking market price increase would like it to be small.
What is the ratio?What is the ratio?
Net IncomeAverage Total Assets
A. Return on AssetsB. Dividend PayoutC. Return on EquityD. Dividend Yield
Return on AssetsReturn on Assets
How well the managers are using the assets to produce income
We are ignoring the difference in comparable companies loans to buy the assets
What is this ratio?What is this ratio?
Net IncomeAverage Stockholder’s Equity
A. Return on AssetsB. Dividend PayoutC. Return on EquityD. Dividend Yield
Return on Stockholder’s Return on Stockholder’s EquityEquity
Measures how well the company used the owner’s investments to earn income
What is the ratio?What is the ratio?
Current Assets – Current Liabilities
A. Current RatioB. Book ValueC. Quick RatioD. Working Capital
Working CapitalWorking Capital
Excess of current assets to current liabilities. Shouldn’t have too much because you are not making your money work for you or you might have borrowed too much and are paying too much interest.
What is the ratio?What is the ratio?
Cash, Marketable Securities, A/R, Short N/RCurrent Liabilities
A. Current RatioB. Book ValueC. Quick RatioD. Working Capital
Acid Test (Quick) RatioAcid Test (Quick) Ratio
Should be more than 1. Measures a company’s ability to meet obligations without having to liquidate inventory.
What is the ratio?What is the ratio?
Current AssetsCurrent Liabilities
A. Current RatioB. Book ValueC. Quick RatioD. Working Capital
Current RatioCurrent Ratio
Measures company’s short term debt paying ability.
2 is a good number
What is the ratio?What is the ratio?
Common Stockholder’s Equity# of Common Shares Outstanding
A. Current RatioB. Book ValueC. Quick RatioD. Working Capital
Book Value Per ShareBook Value Per Share
Amount to be distributed to holders of each share of common stock if all assets were sold at their balance sheet carrying amounts after all creditors were paid off.
Does not equal market value.
Market Value represents future whereas book value represents historical