Category: Financial Ratios

Q25. Quick ratio How is the quick ratio calculated? A25. Quick ratio = Quick assets / Current liabilities Quick assets = Cash + Marketable securities

Section 4. Liquidity Ratios Q24. Current ratio How is the current ratio calculated? A24. Current ratio = Current assets / Current liabilities [Entity 24-a] Current

Q23. Accounts payable turnover ratio How is the accounts payable turnover ratio calculated? A23. Accounts payable turnover ratio = Credit purchases / Average accounts payable

Q22. Accounts receivable turnover ratio How is the accounts receivable turnover ratio calculated? A22. Accounts receivable turnover ratio = Credit sales / Average accounts receivable

Q21. Inventory turnover ratio How is the inventory turnover ratio calculated? A21. Inventory turnover ratio = Cost of goods sold / Average inventory [Entity 21-a]

Section 3. Activity Ratios Q20. Assets turnover ratio How is the assets turnover ratio calculated? A20. Assets turnover ratio = Sales / Average total assets