Accounting ratios

LIQUIDITY

Current ratio = (current assets) / (current liability)

Average collection period = 365 / [(net sales) / (average accounts receivable)]
           * average accounts receivable
              = (current year's accounts receivable + previous year's accounts receivable) / 2

Inventory turnover = (cost of sales) / (average inventory)
           * average inventory = (current year's inventory + previous year's inventory) / 2


PROFITABILITY

Return on equity = (net income) / (average stockholders' equity)
             * average stockholders' equity
                = (current year's stockholders' equity + previous year's stockholders' equity) / 2

Gross profit rate = [(sales) - (cost of goods sold)] / (sales)

Return on sales = (net income) / (sales)

Total asset turnover = (sales) / (average assets)
             * average assets = (current year's assets + previous year's assets) / 2

Return on assets = (net income) / (average assets)
             * average assets = (current year's assets + previous year's assets) / 2

Financial leverage = (average assets) / (averagestockholders' equity)
              * average assets = (current year's assets + previous year's assets) / 2
              * average stockholders' equity
                = (current year's stockholders' equity + previous year's stockholders' equity) / 2