Financial Ratios

Front

A company with a Net Profit Margin of 20% means:

Back

It keeps 20 cents of every dollar in sales as profit

Front

A company's Days Sales Outstanding (DSO) helps measure:

Back

The time it takes to collect receivables

Front

A company's financial performance is best evaluated by:

Back

Analyzing multiple ratios together

Front

A high Inventory Turnover suggests:

Back

Strong sales and efficient inventory management

Front

A low Debt-to-Equity Ratio indicates:

Back

Low financial risk

Front

Days Payable Outstanding (DPO) helps measure:

Back

How long the company takes to pay invoices

Front

How do you calculate break-even in units?

Back

(Unit price - unit COGS) / operating expenses

Front

How is the Operating Profit Margin calculated?

Back

Operating profit / total revenue

Front

If a company has a low Current Ratio, it may:

Back

Struggle to pay short-term liabilities

Front

If a company's Interest Coverage Ratio is below 1, what does it mean?

Back

The company does not generate enough profit to cover interest payments