2025/2026 Wall Street Prep Accounting
EXAM
Liquidity Ratios - ANSWERS-measures of a firm's short-term ability to
meet its current obligations
Profitability Ratios - ANSWERS-measures of a firm's profitability
relative to its assets (operating efficiency) and to its revenue (operating
profitability)
Activity Ratios - ANSWERS-Measure of efficiency of a firm's assets
Solvency Ratios - ANSWERS-Measure of a firm's ability to pay its
obligations
Inventory Turnover - ANSWERS-COGS / avg inventory
Receivables Turnover - ANSWERS-revenue / average accounts
receivable
DSO (Days Sales Outstanding) - ANSWERS-AR/Credit Sales * days in
period
,days in period/receivables turnover
A/P turnover - ANSWERS-COGS / Average A/P
PPP (payables purchasing period) - ANSWERS-days in period/
Accounts payable turnover
Current Ratio - ANSWERS-current assets/current liabilities
Quick ratio (acid test) - ANSWERS-Cash and AR divided by current
liabilities
Gross profit margin - ANSWERS-gross profit/revenue
operating margin - ANSWERS-operating profit/revenue
net profit margin - ANSWERS-net income/revenue
asset turnover - ANSWERS-revenue/ average assets
return on assets (ROA) - ANSWERS-Net Income / Average Assets
,return on equity (ROE) - ANSWERS-net income/ total equity
Basic EPS - ANSWERS-(Net Income - Preferred Dividends)/(Weighted
Average of Shares Outstanding)
Diluted EPS - ANSWERS-diluted net income / weighted average
diluted shares outstanding
dividend yield - ANSWERS-dividends/net income
debt to EBITDA - ANSWERS-Total Debt/EBITDA
interest coverage ratio - ANSWERS-EBIT/ interest expense
fixed charge coverage - ANSWERS-(EBIT + Lease charges)/(Interest
Payments + Lease charges)
Debt to Total Assets - ANSWERS-Total Debt/Total Assets
debt to equity - ANSWERS-total liabilities/total equity
Is land depreciated? - ANSWERS-no
, Depreciation is included within ____________ depending on whether
the asset being depreciated is directly tied with manufacture or
procurement or selling or marketing - ANSWERS-COGS or SG&A
Depreciation and amortization are a ________ expense - ANSWERS-
non-cash
Straight Line Depreciation - ANSWERS-Annual depreciation expense =
(original cost- salvage value)/useful life
Accelerated Depreciation Methods - ANSWERS--calculates a greater
amount of depreciation in early years
-declining balance, sum of years digits, units of production
Amortization Expense - ANSWERS-Allocation of the cost of intangible
assets over the number of years that these assets are expected to help
generate revenue for the company
Types of Intangible assets - ANSWERS-Customer lists
Franchise, membership, licenses
Patents and technology
EXAM
Liquidity Ratios - ANSWERS-measures of a firm's short-term ability to
meet its current obligations
Profitability Ratios - ANSWERS-measures of a firm's profitability
relative to its assets (operating efficiency) and to its revenue (operating
profitability)
Activity Ratios - ANSWERS-Measure of efficiency of a firm's assets
Solvency Ratios - ANSWERS-Measure of a firm's ability to pay its
obligations
Inventory Turnover - ANSWERS-COGS / avg inventory
Receivables Turnover - ANSWERS-revenue / average accounts
receivable
DSO (Days Sales Outstanding) - ANSWERS-AR/Credit Sales * days in
period
,days in period/receivables turnover
A/P turnover - ANSWERS-COGS / Average A/P
PPP (payables purchasing period) - ANSWERS-days in period/
Accounts payable turnover
Current Ratio - ANSWERS-current assets/current liabilities
Quick ratio (acid test) - ANSWERS-Cash and AR divided by current
liabilities
Gross profit margin - ANSWERS-gross profit/revenue
operating margin - ANSWERS-operating profit/revenue
net profit margin - ANSWERS-net income/revenue
asset turnover - ANSWERS-revenue/ average assets
return on assets (ROA) - ANSWERS-Net Income / Average Assets
,return on equity (ROE) - ANSWERS-net income/ total equity
Basic EPS - ANSWERS-(Net Income - Preferred Dividends)/(Weighted
Average of Shares Outstanding)
Diluted EPS - ANSWERS-diluted net income / weighted average
diluted shares outstanding
dividend yield - ANSWERS-dividends/net income
debt to EBITDA - ANSWERS-Total Debt/EBITDA
interest coverage ratio - ANSWERS-EBIT/ interest expense
fixed charge coverage - ANSWERS-(EBIT + Lease charges)/(Interest
Payments + Lease charges)
Debt to Total Assets - ANSWERS-Total Debt/Total Assets
debt to equity - ANSWERS-total liabilities/total equity
Is land depreciated? - ANSWERS-no
, Depreciation is included within ____________ depending on whether
the asset being depreciated is directly tied with manufacture or
procurement or selling or marketing - ANSWERS-COGS or SG&A
Depreciation and amortization are a ________ expense - ANSWERS-
non-cash
Straight Line Depreciation - ANSWERS-Annual depreciation expense =
(original cost- salvage value)/useful life
Accelerated Depreciation Methods - ANSWERS--calculates a greater
amount of depreciation in early years
-declining balance, sum of years digits, units of production
Amortization Expense - ANSWERS-Allocation of the cost of intangible
assets over the number of years that these assets are expected to help
generate revenue for the company
Types of Intangible assets - ANSWERS-Customer lists
Franchise, membership, licenses
Patents and technology
