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## PowerPoint Slideshow about 'Financial Ratios Clicker Quiz What is this ratio' - lotus

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### Financial Ratios

Clicker Quiz

- Earnings Per Share
- A. Inventory Turnover
- B. Accounts Receivable Turnover
- C. Price Earnings Ratio
- D. Debt to Equity

- Stockholder’s Equity
- A. Inventory Turnover
- B. Accounts Receivable Turnover
- C. Price Earnings Ratio
- D. Debt to Equity

- Stockholders like it more than 1 since they will have more control
- Creditors would like it less than 1 since the company is financed more by owners than creditors

- Average inventory
- A. Inventory Turnover
- B. Accounts Receivable Turnover
- C. Price Earnings Ratio
- D. Debt to Equity

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

- Average Accounts Receivable
- A. Inventory Turnover
- B. Accounts Receivable Turnover
- C. Price Earnings Ratio
- D. Debt to Equity

How many times a company converts its receivables into cash each year.

- 52 times would be once a week – 7 days

- Market Price Per Share
- A. Return on Assets
- B. Dividend Payout
- C. Return on Equity
- D. Dividend Yield

- Earnings Per Share
- A. Return on Assets
- B. Dividend Payout
- C. Return on Equity
- D. Dividend Yield

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.

Dividend Payout Ratio- Average Total Assets
- A. Return on Assets
- B. Dividend Payout
- C. Return on Equity
- D. Dividend Yield

How well the managers are using the assets to produce income

- We are ignoring the difference in comparable companies loans to buy the assets

- Average Stockholder’s Equity
- A. Return on Assets
- B. Dividend Payout
- C. Return on Equity
- D. Dividend Yield

Current Assets – Current Liabilities

- A. Current Ratio
- B. Book Value
- C. Quick Ratio
- D. Working 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.

Working CapitalCash, Marketable Securities, A/R, Short N/R

- Current Liabilities
- A. Current Ratio
- B. Book Value
- C. Quick Ratio
- D. Working Capital

Should be more than 1. Measures a company’s ability to meet obligations without having to liquidate inventory.

Acid Test (Quick) Ratio- Current Liabilities
- A. Current Ratio
- B. Book Value
- C. Quick Ratio
- D. Working Capital

- # of Common Shares Outstanding
- A. Current Ratio
- B. Book Value
- C. Quick Ratio
- D. Working Capital

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

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