| A | B |
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| Operating Ratio | this ratio shows the efficiency of a company’s management by comparing operating expense to net sales |
| Net Profit Margin | percentage of revenue remaining after operating expense, taxes, interest and preferred stock has been subtracted from the total revenue |
| Profitability Ratios | these ratios measure a company’s performance and ability to generate earnings as compared to its expenses |
| Quick Ratio | also referred to as acid test ratio; measures a company's ability to meet short term obligations with its most liquid assets |
| Return on Assets | this ratio measures the net income produced by total assets during a period of time; measures how efficiently a company can manage its assets to produce profit |
| Return of Equity | amount of a company’s net income returned as a percentage of shareholders’ equity |
| Return on Investment | this ratio measures the amount of return a company receives on an investment relative to the investment’s cost |
| Return on Sales | this ratio measures a company’s operational efficiency |
| Short-Term Investment | any investments made by a company which will expire within one yea |
| Working Capital | indicates if a company is able to pay bills, make payroll and make loan payments |
| Accounts Payable Turnover Ratio | ratio which measures the rate a company pays off its suppliers |
| Account Receivables | money owed by customers to a business |
| Accounts Receivable Turnover Ratio | ratio which measures how many times a business can turn its accounts receivables into cash during a period of time |
| Annual Report | publication which publicly held corporations must provide to shareholders by law to describe their operations and financial conditions |
| Average Collection Period | calculation which measures the amount of time it takes a company to receive payments owed from its customers and clients |
| Average Payment Period | calculation which measures the average period taken by a company when paying its creditors |
| Business Operating Ratio | formula used to show if a business is losing money, making money or breaking even |
| Capital Structure Ratio | also known as “debt-to-equity” ratio; mix of common stock, preferred stock and debt included in a company’s capital; the ratio compares total debt to total equity |
| Cash | any instruments or contracts which can be immediately deposited in the bank and withdrawn at will |
| Cash Equivalents | any instrument maturing in three months or less |
| Cash Flow Margin | measure which communicates how well company operations create cash from its products and services |
| Cash Ratio | an indicator of a company’s liquidity which further refines the current ratio and quick ratio |
| Current Assets | an account on the balance sheet which shows the value of all company assets which could be turned into cash within one year |
| Current Liability | company’s debt or obligation due within one year |
| Current Ratio | this ratio measures a company’s ability to pay short-term and long-term obligations (debts and account payables) with its assets (cash, marketable securities, inventory and accounts receivables) |
| Debt Service Coverage Ratio | this ratio measures the cash flow available to pay a company’s current debt obligations |
| Efficiency Ratios | these ratios analyze how well a company uses its assets to generate income |
| Financial Ratios | relationships determined from a company’s financial information and used for comparison purposes |
| Gross Profit Margin | amount of profit generated by the sales of products or services after deduction of cost of goods sold |
| Inventory Turnover Ratio | this ratio shows how effectively inventory is managed by comparing cost of goods sold and average inventory for a time period; it reflects the number of times a company's inventory is sold and replaced over a period |
| Liquidity | measure of how much cash a company has to meet short-term or immediate obligations |
| Operating Margin | this margin measures the percentage of total revenue, which is made up of operating income and the operating efficiency of a company |
