Interpret Financial Statements
Series 7 · Flashcards · Recall
SERIES 7 · FLASHCARDS
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QUESTION
State the formula for the debt-to-equity ratio.
QUESTION
What does a higher times interest earned (interest coverage) ratio generally indicate?
QUESTION
State the formula for operating margin (operating profit margin).
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ANSWER
Operating margin
=
EBIT
Sales
\text{Operating margin} = \frac{\text{EBIT}}{\text{Sales}}
Operating margin
=
Sales
EBIT
. Measures profitability from core business operations before interest and taxes as a percentage of revenue.
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