Sections
Horizontal Analysis
Vertical Analysis
Common-sized Statements
Trend Percentages
Discontinued Operations and Extraordinary Items
Introduction to Ratios
Ratios: Earnings Per Share (EPS)
Ratios: Working Capital and the Current Ratio
Ratios: Quick (Acid Test) Ratio
Ratios: Gross Profit Rate
Ratios: Profit Margin
Ratios: Quality of Earnings Ratio
Ratios: Inventory Turnover
Ratios: Average Days in Inventory
Ratios: Accounts Receivable (AR) Turnover
Ratios: Average Collection Period (Days Sales Outstanding)
Ratios: Return on Assets (ROA)
Ratios: Total Asset Turnover
Ratios: Fixed Asset Turnover
Ratios: Profit Margin x Asset Turnover = Return On Assets
Ratios: Accounts Payable Turnover
Ratios: Days Payable Outstanding (DPO)
Ratios: Times Interest Earned (TIE)
Ratios: Debt to Asset Ratio
Ratios: Debt to Equity Ratio
Ratios: Payout Ratio
Ratios: Dividend Yield Ratio
Ratios: Return on Equity (ROE)
Ratios: DuPont Model for Return on Equity (ROE)
Ratios: Free Cash Flow
Ratios: Price-Earnings Ratio (PE Ratio)
Ratios: Book Value per Share of Common Stock
Ratios: Cash to Monthly Cash Expenses
Ratios: Cash Return on Assets
Ratios: Economic Return from Investing
Ratios: Capital Acquisition Ratio
Additional Practice
Ratios Cumulative Problems

Concept #1: Ratios: Price-Earnings Ratio (PE Ratio)

Practice: MoneyCo had sales revenue and net income during the current year of $500,000 and $60,000, respectively. The total amount of stockholders’ equity was $600,000, and common shares outstanding were 120,000 all year. If the market price of the stock is $10, what is the P/E ratio?

Practice: Tougher Company’s current year income statement showed an EPS of $1.25 per share. If total common equity totaled $600,000 (40,000 common shares), preferred dividends were $10,000 (10,000 preferred shares), and the market price of common and preferred stock are $25 and $50, respectively, what is the company’s P/E ratio?

Additional Problems
Consider the following information: Compute the market test of price/earnings ratio to the nearest tenth. A. 6.3 B. 15.0 C. 17.3 D. 5.0
The 5,000 shares of Goldsmith's outstanding common stock originally sold for $10 per share. As of 12/31/12, the stock is selling at $15 per share. What is Goldsmith's price/earnings ratio as of 12/31/12 (round to 2 decimal places)? A. 3.73 B. 3.00 C. 11.19 D. 7.46
Vandross Inc. had net income of $160,000 and paid dividends to common stockholders of $40,000 in 2014. The weighted average number of shares outstanding in 2014 was 50,000 shares. The company's common stock is selling for $50 per share on the New York Stock Exchange. Vandross price-earnings ratio is a. 3.2 times. b. 15.6 times. c. 10 times. d. 5 times.
The Venetian Corporation recently reported net income of $3,000,000.  It has 600,000 shares of common stock, which currently trades at $50 a share.  Venetian continues to expand and expects that 1 year from now its net income will be $4,125,000.  Over the next year it also anticipates issuing an additional 180,000 shares of stock, so that 1 year from now it will have 780,000 shares of common stock.  Assuming its price/earnings ratio remains at its current level, what will be its stock price 1 year from now? a. $50.00 b. $47.27 c. $52.88 d. $38.46 e. $68.75
You are given the following information about a company: Calculate the price of a share of the company’s common stock. a. $176.19 b. $13.80 c. $96.76 d. $80.09 e. $73.13
The Bellagio Corporation recently reported net income of $2,000,000.  It has 500,000 shares of common stock, which currently trades at $60 a share. Bellagio continues to expand and expects that 1 year from now its net income will be $2,750,000. Over the next year it also anticipates issuing an additional 200,000 shares of stock, so that 1 year from now it will have 700,000 shares of common stock. Assuming its price/earnings ratio remains at its current level, what will be its stock price 1 year from now? a. $82.50 b. $42.86 c. $60.00 d. $58.93 e. $61.09