Scribd
Upload
99 views2 pages

Ratios For Finman

This document defines and explains various financial ratios used to analyze a company's liquidity, activity, debt, profitability, and market performance. Liquidity ratios like the current and quick ratios measure a company's ability to meet short-term obligations. Activity ratios such as inventory turnover and average collection period examine how efficiently a company utilizes its assets. Debt ratios like the times-interest-earned ratio analyze financial leverage. Profitability ratios including gross profit margin and return on equity assess how effectively a company generates profits from its resources. Market ratios such as the price-to-earnings ratio and market-to-book ratio compare market and accounting valuations.

Uploaded by

Daneen Gastar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
99 views2 pages

Ratios For Finman

This document defines and explains various financial ratios used to analyze a company's liquidity, activity, debt, profitability, and market performance. Liquidity ratios like the current and quick ratios measure a company's ability to meet short-term obligations. Activity ratios such as inventory turnover and average collection period examine how efficiently a company utilizes its assets. Debt ratios like the times-interest-earned ratio analyze financial leverage. Profitability ratios including gross profit margin and return on equity assess how effectively a company generates profits from its resources. Market ratios such as the price-to-earnings ratio and market-to-book ratio compare market and accounting valuations.

Uploaded by

Daneen Gastar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

LIQUIDITY RATIOS

 CURRENT RATIO= CURRENT ASSETS


CURRENT LIABILITIES

 QUICK(ACID-TEST) RATIO= CURRENT ASSETS-INVENTORY


CURRENT LIABILITIES

ACTIVITY RATIOS
 INVENTORY TURNOVER= COST OF GOODS SOLD
INVENTORY

AVERAGE DAY INVENTORY= INVENTORY TURNOVER


365
 AVERAGE COLLECTION PERIOD= ACCOUNTS RECEIVABLE
AVERAGE SALES PER DAY ANNUAL SALES
365
 AVERAGE PAYMENT PERIOD= ACCOUNTS PAYABLE
AVERAGE PURCHASES PER DAY ANNUAL PURCHASES
365
 TOTAL ASSETS TURNOVER= SALES
TOTAL ASSETS
DEBT RATIOS
 TIME-INTEREST EARNED RATIO= EARNINGS BEFORE INTEREST & TAXES
TAXES

 FIXED- PAYMENTS COVERAGE RATIO= EARNINGS BEFORE INTEREST & TAXES


{(LEASE PAYMENTS+INTEREST)+(PRINCIPAL PAYMENTS +PREF. STOCK DIV)X[1/(1-T)]}

PROFITABILITY RATIOS
 GROSS PROFIT MARGIN= GROSS PROFIT(SALES-COST OF GOODS SOLD)
SALES
 OPERATING PROFIT MARGIN= OPERATING PROFIT(BEFORE INTEREST,TAXES &PREF)
SALES
 NET PROFIT MARGIN= EARNINGS AVAIL. FOR COMMON STOCKHOLDERS
SALES
 EARNINGS PER SHARE= EARNINGS AVAIL. FOR COMMON STOCKHOLDERS
NUMBER OF COMMON STOCKS OUTSTANDING

 RETURN ON ASSETS= EARNINGS AVAIL. FOR COMMON STOCKHOLDERS


TOTAL ASSETS
 RETURN ON EQUITY= EARNINGS AVAIL. FOR COMMON STOCKHOLDERS
COMMON STOCK EQUITY TOTAL SHAREHOLDERS EQUITY
(PREF. STOCKS EQUITY)
MARKET RATIOS
 PRICE/EARNINGS (P/E) RATIO = MARKET PRICE PER SHARE OF COMMON STOCK
EARNINGS PER SHARE

 MARKET/BOOK (M/B) RATIO= MARKET PRICE PER SHARE OF COMMON STOCK


BOOK VALUE PER SHARE OF COMMON STOCK

COMMON STOCK EQUITY


NUMBER OF COMMON STOCK OUTSTANDING

You might also like