Question

Q9 to Q12- Write the formula for the following ratios and what each ratio measures:

1. Return on equity (ROE)
2. Return on assets (ROA)
3. Gross profit
4. Gross margin
5. Profit margin (also called the “net profit margin”)
6. Asset turnover
7. Fixed-Asset Turnover
8. Inventory Turnover
9. Inventory Period (also called “days inventory outstanding”)
10. Collection Period (also called “account receivable period”)
11. Payables Period (also called “account payable period”)
12. Operating Cycle
13. Cash Conversion Cycle
14. Financial Leverage (also called “equity multiplier” )
15. Debt-to-assets ratio
16. Debt-to-equity ratio
17. Times interest earned
18. Current ratio
19. Quick ratio (also called “acid rest”)
20. Write the formula for the P/E ratio and what it measures?
21. Should you invest in a company with high P/E or low P/E?

Answer 1