Matching Each Ratio with Its Computational Formula
Match each ratio or percentage with its formula by entering the appropriate letter for each numbered item.
Ratios or Percentages | Formula |
____ 1. Current ratio | A. Net income ÷ Net sales revenue |
____ 2. Net profit margin | B. (Net sales revenue — Cost of goods sold) ÷ Net sales revenue |
____ 3. Inventory turnover ratio | C. Current assets ÷ Current liabilities |
____ 4. Gross profit percentage | D. Cost of goods sold ÷ Average inventory |
____ 5. Fixed asset turnover | E. Net credit sales revenue ÷ Average net receivables |
____ 6. Capital acquisitions ratio | F. Net cash flows from operating activities ÷ Net income |
____ 7. Return on equity | G. Net income ÷ Average number of common shares outstanding |
____ 8. Times interest earned | H. Total liabilities ÷ Total assets |
____ 9. Debt-to-assets ratio | I. (Net income + Interest expense + Income tax expense) ÷ Interest expense |
____ 10. Price/earnings ratio | J. Net cash flows from operating activities ÷ Cash paid |
____ 11. Receivables turnover ratio | for property, plant, and equipment |
____ 12. Earnings per share | K. Current market price per share ÷ Earnings per share |
| L. Net income ÷ Average total stockholders’ equity |
____ 13. Quality of income ratio | M. Net sales revenue ÷ Average net fixed assets |
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