AFM123 Chapter 13: ch13.docx
3 Mar 2014
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Profitability - gross profit percentage, net profit margin, earnings per. Liquidity - how quickly you can convert something to cash; current. Profitability ratios: gross profit = net sales cogs net sales, net profit margin = net income net sales, earnings per share (to common share holders) = average of commonshares net income, average # of common shares = Of shares at start of year of shares at year end. 2: return on equity = net income average shareholdersequity, fixed assets turnover = averagenet net sales costs , price to earnings = stock price earnings per share. Solvency ratio: debt to equity = total liabilities totalequity at your reporting date, times interest earned = net income+interest expense+incometax expense interest expense, example: Agree to provide 6 months" copying services to def corp. for cash. If agreed to provide 6 months starting feb 1 for on. Common shares and there are 12 000 outstanding.
