ACC 1100 Introductory Financial Accounting

Ratio Definitions for Lecture, Assignment, and Exam

Profitability Ratios
Gross profit
Gross profit margin
Sales
Net income
Profit margin
Sales
Net income
Return on assets (ROA)
Average total assets
Net income*
Return on equity (ROE)
Average common shareholders’ equity
Net income*
Basic earnings per share
Average number of common shares
Sales
Asset turnover
Average total assets
Market price per share*
Price-earnings ratio
Basic earnings per share
Dividend per share
Dividend yield
Market price per share
Liquidity Ratios
Current assets
Current ratio
Current liabilities
Sales*
Receivable turnover
Average accounts receivable
Cost of goods sold
Inventory turnover
Average inventory
Solvency Ratios
Total liabilities
Debt to total assets
Total assets
Net income + Interest expense + Income tax expense
Times interest earned
Interest expense
Average items are calculated as (beginning balance + ending balance) / 2.
*This is a simplified version, which is different from the textbook.
*Closing market price per share at end of the fiscal year.
*Assume all sales are credit sales.