1. The power of ratios lies in the fact that:________________________________________________________________________________________________________________________________________________
2. What are the three ways that ratios can be compare to:
3. __________________________________
4. __________________________________
5. __________________________________

3. What are the four categories of ratios that managers and other stakeholders use:
4. __________________________________
5. __________________________________
6. __________________________________
7. __________________________________

4. What is the formula used to calculate the Gross Margin percentage
5. A negative trend in gross margin typically indicates:
6. ___________________________________
7. ___________________________________
8. What is the formula used to calculate Operating Margin percentage
9. A downward trend in operating margin could indicate that _______________________________________________________________________________________________________________________________________
10. What is the formula used to calculate the Net Profit Margin percentage
11. What does the net profit margin tell a company ________________________________________________________________________________________________________________________________________
12. What is the formula used to calculate Return on Assets (ROA)
13. List the two ways that ROA be too high?
14. What is the formula used to calculate Return on Equity (ROE)
15. ROE is a good indication of whether the company is capable of _________________________________________________________________________________________________________________________________
16. What is operating leverage? __________________________________________________________________________________________________________________________________
17. What is financial leverage? __________________________________________________________________________________________________________________________________
18. What is the formula used to calculate the Debt-To-Equity ratio (D/E)
19. What does a D/E greater than one mean?
20. What is the formula used to calculate the Current Ratio?
21. A current ratio that is too high can indicate __________________________________________________________________________________________________________________________________
22. What is the formula used to calculate the Quick ratio?
23. What is the formula used to calculate Days in Inventory (DII)?
24. What is the formula used to calculate Inventory Turns?

23 The lower the DII and the higher Inventory turns indicates ____________________________________________________________________________________________________________________________________

24.What is the formula used to calculate Days Sales Outstanding (DSO)?

25. Careful management of DSO can ____________________________________________________________________________________________________________________________________
26. What is the formula used to calculate Days Payable Outstanding (DPO)?
27. Watching DPO is a way of ensuring that the company ____________________________________________________________________________________________________________________________________
28. What is the formula used to calculate Property, Plant and Equipment turnover (PPE)
29. What affect does leased property have on the PPE calculation?
30. What is the formula used to calculate Total Asset Turnover?
31. What is the formula used to calculate Earnings Per Share (EPS)
32. What is EBITDA?
33. What is the formula used to calculate the Price-to-Earnings ratio (P/E)?
34. Historically, most businesses have traded in public markets at P/E ratios of __________________