Profitability
Ratios
Liquidity
Ratios
Solvency
Ratios
Other
Terms
Review
Potpourri
$100
$100
$100
$100
$100
$200
$200
$200
$200
$200
$300
$300
$300
$300
$300
$400
$400
$400
$400
$400
$500
$500
$500
$500
$500
Profitability Ratios - $100
Indicates the percentage of sales that
exceed the cost of goods sold.
What is the Gross Profit Percentage?
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Profitability Ratios - $200
Indicates how much the company
generates in sales for each dollar invested
in fixed assets.
What is the Fixed Asset Turnover ratio?
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Profitability Ratios - $300
Indicates the percentage of sales revenue
that ultimately makes it into net income.
What is the Net Profit Margin ratio?
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Profitability Ratios - $400
Indicates the amount of sales generated
for each dollar invested in assets.
What is the Asset Turnover ratio? (Different
from Fixed Asset turnover ratio.)
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Profitability Ratios - $500
Indicates the amount of earnings
generated for each share of common
stock.
What is the Earnings per Share (EPS) ratio?
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Liquidity Ratios - $100
The term that relates to a company’s
ability to pay its currently maturing
obligations.
What is Liquidity?
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Liquidity Ratios - $200
Indicates how frequently inventory is
bought and sold during the year.
What is the Inventory Turnover ratio?
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Liquidity Ratios - $300
Compares current assets to current
liabilities.
What is the Current ratio?
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Liquidity Ratios - $400
Indicates how many times, on average,
the process of selling on credit and
collecting is repeated during the period.
What is the Receivables Turnover ratio?
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Liquidity Ratios - $500
The process used to calculate the number
of days it takes to sell inventory during a
year.
What is “dividing 365 by the annual
Inventory Turnover ratio”?
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Solvency Ratios - $100
The term that refers to a company’s ability
to survive long enough to repay lenders
when debt matures.
What is Solvency?
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Solvency Ratios - $200
Indicates the proportion of total assets that
are financed by creditors.
What is the Debt-to-Assets ratio?
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Solvency Ratios - $300
DAILY DOUBLE!!!
Solvency Ratios - $400
Compares cash flows from operations to
cash paid for property and equipment.
What is the Capital Acquisitions ratio?
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Solvency Ratios - $500
Indicates how many times interest payments
are covered by operating cash flows (before
cash paid for financing and taxes).
What is the Cash Coverage ratio?
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Other Terms - $100
The assumption that indicates that the
long life of a company can be reported in
shorter time periods.
What is the Time Period Assumption?
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Other Terms - $200
Recognizes that companies in certain
industries must follow accounting rules
peculiar to that industry.
What is the Industry Practices Constraint?
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Other Terms - $300
States that businesses are assumed to
continue to operate into the foreseeable
future.
What is the Going-Concern (Continuity)
Assumption?
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Other Terms - $400
States that accounting rules should be
followed to the extent that the benefits
outweigh the costs of doing so.
What is the Cost-Benefit Constraint?
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Other Terms - $500
The principle that financial reports should
present all information that is needed to
properly interpret the results of the
company’s business activities.
What is the “full disclosure principle”?
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Review Potpourri - $100
The section of the SCF under which an
increase in long-term debt is reported.
What is Cash Flows from Financing?
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Review Potpourri - $200
The inventory costing method that assigns
the costs of the first goods purchased to
the first goods sold.
What is FIFO (first-in, first-out)?
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Review Potpourri - $300
The Cost of Goods Sold equation.
What is Beginning Inventory + Purchases –
Ending Inventory = COGS?
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Review Potpourri - $400
The method of estimating bad debt
expense that is based on the age of
customer account balances.
What is the Aging method?
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Review Potpourri - $500
The Fundamental Accounting Equation.
What is Assets = Liabilities + Stockholders’ Equity?
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Daily Double

Specify Your Wager!
Solvency Ratios --Indicates how many times interest
expense is covered by income (before
the costs of financing and taxes).
What is the Times Interest Earned ratio?
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