CFA – Accounting Ratios

Liquidity ratios

$\mbox{Current ratio} = \frac {\mbox{Current Assets}} {\mbox{Current Liabilities}}$

$\mbox{Quick (Acid Test) Ratio} = {\mbox{Cash and Cash Equivalent} + \mbox{Marketable Securities} + \mbox{Accounts Receivable}\over \mbox{Current Liabilities}}$

Cash ratio is the same as Quick without the accounts receivable

Solvency ratios

Long term debt to equity = total debt / total equity

Debt to equity = total debt / total equity

Total debt ratio = total debt / total assets

Financial leverage ratio = total assets / total equity

Published: 08/05/2010

Share on Twitter