V' STOCKS

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V. STOCKS
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L. RATIO ANALYSIS

• Ratios That Measure Liquidity (the firms ability
  to convert assets into cash)
• Current Ratio Current Assets
• Current Liabilities
• The higher the current ratio, the greater the
  firms liquidity and its ability to continue
  operations

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L. RATIO ANALYSIS (CONTINUED)

• Quick (Acid Test) Ratio
• Current Assets - Inventory
• Current Liabilities
• The Quick Ratio measures whether a firm has
  sufficient assets that either are or can be
  readily converted into cash to pay current
  liabilities
• Ratios That Measure Activity Provide a gauge of
  the firms operations and operating efficiency

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L. RATIO ANALYSIS (CONTINUED)

• Inventory Turnover Net Sales
• Inventory
• Higher turnover is generally better, but
  turnover rates vary by industry
• Average Collection Period
• Accounts Receivable
• Annual Credit Sales per 360 Days
• The longer the collection period, the more
  likely it is that a firm will not be able to
  collect on all of its accounts receivable

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L. RATIO ANALYSIS (CONTINUED)

• Fixed Assets Turnover Net Sales
• Net Fixed Assets
• A measure of efficiency in the use of plant
  capacity.
• Total Assets Turnover Net Sales
• Total Assets
• Sales volume as a percentage of assets a
  measure of operating leverage, the quantity of
  sales that are produced from the firms
  investment in assets

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L. RATIO ANALYSIS (CONTINUED)

• Ratios that Measure Profitability
• Operating Profit Margin
• Net Operating Profit
• Net Sales
• Higher Better, but must compare with industry
  averages for consistency
• Net Profit Margin Net Income
• Net Sales
• Results of operations, financing, investing, and
  taxes

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L. RATIO ANALYSIS (CONTINUED)

• Return on Equity Net Income
• Stockholders Equity
• Measures efficiency of use of corporate
  (shareholders) capital.
• Ratios Measuring Capitalization (Use of Leverage)
  
• Debt to Total Assets Total Liabilities
• Total Assets
• Indicates the portion of corporate assets
  financed by debt.

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L. RATIO ANALYSIS (CONTINUED)

• Long Term Debt to Total Capitalization
• Long Term Debt
• Long Term Debt Shareholders Equity
• Indicates balance of permanent financing.
• Debt to Equity Total Liabilities
• Total Stockholders Equity
• An indicator of debt used to finance assets and
  operations.

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L. RATIO ANALYSIS (CONTINUED)

• Times Interest Earned
• Earnings Before Interest, Taxes, and
• Depreciation (EBITD)
• Long Term Debt Shareholders Equity
• A measure of the firms ability to service debt.
  
• Fixed Charge Coverage
• Earnings Before Interest, Taxes, and
• Depreciation (EBITD)
• Interest Charges Lease Payments
• A measure of the firms ability to service debt
  and other fixed expenses.

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L. RATIO ANALYSIS (CONTINUED)

• Ratios That Measure Stock Value
• Price-Earnings Ratio
• Market Price of Common Shares
• Earnings per Common Share
• Shows the multiple of earnings per share of stock
  price.
• Net Profit Margin
• Market Price of Common Shares
• Book Value per Share
• Book value per share total assets minus
  intangible assets minus total liabilities minus
  preferred shares outstanding Measures the
  multiple of book value per share of common stock

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L. RATIO ANALYSIS (CONTINUED)

• Dividend Payout Ratio
• Dividends Per Common Share
• Earnings Per Common Share
• An indicator of a firms ability to continue to
  make dividend payments.