Financial Accounting Final Exam Formulas

Final exam formulas

12 cards   |   Total Attempts: 182
  

Cards In This Set

Front Back
What information does liquidity give?
Can the company survive in the short term
What are the two common measures of liquidity?
Working capital and current ratio
What information does solvency give?
Can the company survive in the long term
What is the common measure of solvency?
Debt/Equity
What information does profitability give?
Is the company making a profit that can be returned to shareholders
What are the common measures of profitability?
Gross profit margin, net profit margin, and return on equity
What is the formula for working capital?
Total current assets - Total current liabilities
What is the formula for current ratio?
Current assets / Current liabilities
What is the formula for debt to equity?
Total debt / Stockholders' equity
What is the formula for gross profit margin?
Gross profit / sales
What is the formula for net profit margin?
Net income / sales
What is the formula for return on equity?
Net income / average stockholders' equity