FABM FINANCIAL RATIOS
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Questions and Answers

FORMULA FOR CURRENT RATIO

CR=CA/CL

FORMULA FOR QUICK RATIO

QR=CA-PREPAID-INVENTORY OR SUPPLIES/CL

FORMULA FOR ACCOUNTS RECEIVABLE TURNOVER RATIO

ARTR=NET SALES/AVARAGE ACCOUNTS RECEIVABLE (NET)

FORMULA FOR AVERAGE COLLECTION PERIOD

<p>ACP=365 DAYS/ACCOUNTS RECEIVABLE TURNOVER RATIO</p> Signup and view all the answers

FORMULA FOR INVENTORY TURNOVER RATIO

<p>ITR=COST OF GOODS SOLD/AVERAGE INVENTORY</p> Signup and view all the answers

FORMULA FOR AVERAGE DAYS IN INVENTORY

<p>ADII= 365DAYS/INVENTORY TURNOVER RATIO</p> Signup and view all the answers

FORMULA FOR NUMBER OF DAYS IN OPERATING CYCLE

<p>NODIOC= COLLECTION PERIOD + AVERAGE DAYS IN INVENTORY</p> Signup and view all the answers

FORMULA FOR BAD DEBTS

<p>BD = TOTAL LIABILITIES/TOTAL ASSETS</p> Signup and view all the answers

FORMULA FOR DEBIT TO EQUITY RATIO

<p>DTER = TOTAL LIABILITIES/TOTAL EQUITY</p> Signup and view all the answers

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