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Ratios

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|FINAL PROJECT RATIOS | LIQUIDITY AND ACTIVIY Current Ratio measures the ability of a firm to pay its short-term debts. The formula is: |Current Ratio |= |Current Assets | | | |Current Liabilities | Quick (Acid-Test) Ratio measures the immediate ability of a firm to pay its short-term debts. The formula is: |Current Ratio |= |Cash + Marketable Securities…show more content…
The formula is: |Free Cash Flow = |Net cash provided by | | |operating activities – Capital Expenditures – Dividends | Accounts Receivable Turnover measures the number of times, on average, the company collects receivables in the period. The formula is: |Accounts Receivable Turnover |= |Net Sales or Net Revenues | | | |Average Accounts Receivable | Days’ Sales Outstanding measures days required to collect receivables from customers. The formula is: |Days’ Sales Outstanding |= |Ending Accounts Receivable |X 365 days | | | |Net Sales or Net Revenues | | Inventory Turnover measures the number of times, on average, the company sells inventory in the period. The formula is: |Inventory Turnover |= |Cost of Goods Sold | | | |Average Inventory | Days’ Sales in Inventory measures days required to sell inventory. The formula is: |Days’ Inventory
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