| ACTIVITY RATIOS |
Shows
how effectively a firm is
using its assets. |
| Inventory Turnover - number of times inventory is sold
over a certain time. The higher the better. More
Inventory Ratios |
CGS/(Average Inventory) |
| Total Asset Turnover |
Sales/(Total Assets) |
| Average Collection Period - the time between making a sale
and receiving payment. |
Accounts Receivable/Credit Sales per day |
| Fixed Asset Turnover |
Sales/Fixed Assets |
| Asset Turnover |
Sales/Average Total Assets |
| Accounts Receivable Turnover - the number of times per
year a company completely clears all of its outstanding debt. The
higher the number the better. |
Sales/Average Account Receivables |
| Accounts Payable Turnover
- how quickly is the company
paying its bills |
Cost of goods sold/average accounts payable |
| PROFITABILITY RATIOS |
Shows
the effectiveness of the
company by the returns from
investments and sales |
| Return on Assets (ROA) - the profit earned from the use of
assets. |
Profit after taxes/Average Total Assets |
| Return on Equity (ROE) - the rate of return of the
stockholders investment. |
Net Income/Average Stockholder's Equity |
| Net Profit Margin -percentage of profit earn from sales. |
Profit after Taxes/Sales |
| Earnings Per Share |
Net Income/Weighted Average Number of Common Shares
Outstanding |
| Gross Profit margin - percentage of sales available to
cover operating costs. |
Net Income/Sales |
| Dupont ROE |
net profit
margin x total asset
turnover x equity multiplier
=
(Net
Income/sales) * (Sales/Total
assets) * (Total
assets/stockholders' equity)
|
| Market to Book |
Common stock
price per share/book value
of common stock per share |
| Price/Earnings
(PE) - A high PE ratio
greater than the industry
average indicates that the
market expects the company
to be profitable in the
future |
price per
share of common
stock/earnings per share |
| Return on
Investment (ROI) |
Net profits
after taxes/Total assets |
| Earnings Per
Share (EPS) |
Earning
available for common
stockholder/number of shares
of common stock outstanding |
| Price earnings
ratio (P/E) |
Market price
per share of common
stock/earnings per share |
| LIQUIDITY RATIOS |
Shows
the firms ability to meet
short term debt obligations |
| Current Ratio - measures the liquidity of a company.
A current ratio of 1.5 or greater is usually sufficient to meet short
term needs. |
Current Assets/Current Liabilities |
| Quick Ratio - measures how well a company can pay its
depts without selling inventory. Same as the current ratio except
it takes inventories out of the picture. A quick ratio above 1.0
generally indicates the company can meet its obligations. |
(Current Assets - Inventories)/Current Liabilities |
| Net working
capital to total assets |
(current
assets-inventory)/total
assets |
| Working
Capital - measures a
company's capability to pay
short term obligations |
Working
Capital = Current Assets -
Current Liabilities |
| A/R Turnover |
A/R Turnover =
Sales/Average Accounts
Receivables |
| |
|
| DEBT |
|
| Debt to Equity |
Total Liabilities/Total Stockholder's Equity |
| Debt ratio |
Total
liabilities/total assets |
