Course Outline
Join PRO

Financial Ratios (Crossword Puzzles)

Author:
Harold Averkamp, CPA, MBA

Financial Ratios #1

Open Online Open PDF

Financial Ratios #2

Open Online Open PDF

Financial Ratios #3

Open Online Open PDF

Financial ratios are part of the broader topic financial statement analysis. Since most of the financial ratios are calculated from amounts reported on recent financial statements, they are historic in nature.

The following financial ratios are calculated by using amounts reported on the balance sheet:

  • Working capital
  • Current ratio
  • Quick ratio
  • Debt to equity ratio
  • Debt ratio

The first three ratios are indicators of a corporation's liquidity. The latter two ratios are indicators of a corporation's degree of leverage.

The following financial ratios use amounts from both the balance sheet and the income statement:

  • Inventory turnover
  • Accounts receivable turnover
  • Return on equity
  • Return on assets

For example, the inventory turnover ratio is calculated by dividing the cost of goods sold (from the income statement) by the average inventory amounts that are found on the balance sheets.

Examples of financial ratios that use amounts only from the income statement include:

  • Gross margin ratio (gross profit divided by net sales)
  • Return on sales (net income divided by net sales)

These financial ratios are indicators of a company's profitability.

In addition to financial ratios, another tool in financial statement analysis is common-size financial statements. A common-size balance sheet results when every amount on the balance sheet is divided by the amount of total assets. A common-size income statement is the result of dividing each item on the income statement by the amount of net sales. Common-size financial statements allow for a comparison between companies of any size and also with industry averages. For example, a corporation's common-size balance sheet might indicate that its current assets are 40% of its total assets. That percentage can then be compared to a competitor's percentage and to the percentage for its industry.

If a corporation's stock is publicly traded, the Management Discussion section of its annual report to the Securities and Exchange Commission Form 10-K provides helpful information behind the financial ratios.

Advance Your Accounting and Bookkeeping Career

Must Watch image

  • Perform better at your job
  • Get hired for a new position
  • Understand your small business
  • Pass your accounting class
Watch the Video
Certificates of Achievement

Earn Our Certificates of Achievement

Certificates of Achievement
  • Debits and Credits
  • Adjusting Entries
  • Financial Statements
  • Balance Sheet
  • Income Statement
  • Cash Flow Statement
  • Working Capital and Liquidity
  • Financial Ratios
  • Bank Reconciliation
  • Accounts Receivable and Bad Debts Expense
  • Inventory and Cost of Goods Sold
  • Depreciation
  • Payroll Accounting
View PRO Plus Features

Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials

Read all 2,866 reviews

Features

PRO

PRO Plus

Features
Lifetime Access (One-Time Fee)
Explanations
Quizzes
Q&A
Word Scrambles
Crosswords
Bookkeeping Video Training
Financial Statements Video Training
Flashcards
Visual Tutorials
Quick Tests
Quick Tests with Coaching
Cheat Sheets
Bookkeeping Study Guide
Managerial Study Guide
Business Forms
All PDF Files
Progress Tracking
Earn Badges and Points
Certificate - Debits and Credits
Certificate - Adjusting Entries
Certificate - Financial Statements
Certificate - Balance Sheet
Certificate - Income Statement
Certificate - Cash Flow Statement
Certificate - Working Capital
Certificate - Financial Ratios
Certificate - Bank Reconciliation
Certificate - Accounts Receivable and Bad Debts Expense
Certificate - Inventory and Cost of Goods Sold
Certificate - Depreciation
Certificate - Payroll Accounting
Motivational Badges
Motivational Points
Medal Rankings
Activity Streaks
Custom Public Profile Page of Achievements

About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

Read 2,866 Testimonials

Take the Tour Join Pro Upgrade to Pro Plus