1. Financial Ratios Clicker Quiz

2. What is this ratio? Market Price Per Share Earnings Per Share A. Inventory Turnover B. Accounts Receivable Turnover C. Price Earnings Ratio D. Debt to Equity

3. Price Earnings Ratio Public’s confidence in the future growth of the company

4. What is this ratio? Total Liabilities Stockholder’s Equity A. Inventory Turnover B. Accounts Receivable Turnover C. Price Earnings Ratio D. Debt to Equity

5. Debt to Equity Ratio Proportions of 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

6. What is this ratio? Cost of Goods Sold Average inventory A. Inventory Turnover B. Accounts Receivable Turnover C. Price Earnings Ratio D. Debt to Equity

7. Inventory 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

8. What is this ratio? Sales on Account Average Accounts Receivable A. Inventory Turnover B. Accounts Receivable Turnover C. Price Earnings Ratio D. Debt to Equity

9. Accounts Receivable Turnover How many times a company converts its receivables into cash each year. 52 times would be once a week – 7 days

10. What ratio is this? Dividends Per Share Market Price Per Share A. Return on Assets B. Dividend Payout C. Return on Equity D. Dividend Yield

11. Dividend Yield Ratio Return (dividends) on current market price of the stock

12. What is the ratio? Dividends Per Share Earnings Per Share A. Return on Assets B. Dividend Payout C. Return on Equity D. Dividend Yield

13. Dividend 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.

14. What is the ratio? Net Income Average Total Assets A. Return on Assets B. Dividend Payout C. Return on Equity D. Dividend Yield

15. Return 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

16. What is this ratio? Net Income Average Stockholder’s Equity A. Return on Assets B. Dividend Payout C. Return on Equity D. Dividend Yield

17. Return on Stockholder’s Equity Measures how well the company used the owner’s investments to earn income

18. What is the ratio? Current Assets – Current Liabilities A. Current Ratio B. Book Value C. Quick Ratio D. Working Capital

19. 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.

20. What is the ratio? Cash, Marketable Securities, A/R, Short N/R Current Liabilities A. Current Ratio B. Book Value C. Quick Ratio D. Working Capital

21. Acid Test (Quick) Ratio Should be more than 1. Measures a company’s ability to meet obligations without having to liquidate inventory.

22. What is the ratio? Current Assets Current Liabilities A. Current Ratio B. Book Value C. Quick Ratio D. Working Capital

23. Current Ratio Measures company’s short term debt paying ability. 2 is a good number

24. What is the ratio? Common Stockholder’s Equity # of Common Shares Outstanding A. Current Ratio B. Book Value C. Quick Ratio D. Working Capital

25. Book 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