Question: Working Capital

Answer: Current Assets - Current Liabilities. The working capital ratio (Current Assets/Current Liabilities) indicates whether a company has enough short term assets to cover its short term debt.

Question: Current Ratio

Answer: Current Assets / Current Liabilities, The current ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations.

Question: Quick Ratio

Answer: (Cash + AR + Mkt Sec) / Current Liabilities. The quick ratio is a measure of how well a company can meet its short-term financial liabilities.

Question: Inventory Turnover Ratio

Answer: COGS / Inventory. Inventory turnover is a ratio showing how many times a company’s inventory is sold and replaced over a period of time.

Question: Days Inventory Outstanding

Answer: 365 days / Inventory Turnover. DIO is an efficiency ratio that measures the average number of days the company holds its inventory before selling it. The ratio measures the number of days funds are tied up in inventory.