Ratio Definitions

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Ratio Definitions

Acid Test Ratio - A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets.


Asset Financing Ratio - Financing for which assets are converted into working cash in exchange for a security interest in those assets. The most common kind of asset financing is to extend loans against accounts receivable, but other kinds of asset financing, such as lending against inventories, are becoming more common.


Current Ratio - The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.


Customer Days


Inventory days - The average number of days goods remain in inventory before being sold.


Inventory turnover - In accounting, Inventory turnover measures the number of times inventory is sold or used in a period such as a year.


Profitability (%) - A class of financial metrics used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.


Return on Equity (%) - The amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.  


Solvency - the ability to meet maturing obligations as they come due


Supplier Days

definition source various including Wikipedia, investopedia.com