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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


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