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