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    Ratio Analysis - Easy To Remember

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    KhushbuJ
    The document discusses various types of financial ratios used for analysis including: activity ratios, liquidity ratios, solvency ratios, profitability ratios, and valuation/investment ratios. It provides the formulas and definitions for numerous individual ratios within each category such as current ratio, debt-to-equity ratio, return on assets, and price-to-earnings ratio. The ratios measure aspects of a company's operations, liquidity, debt levels, profitability, and stock valuation.

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    Ratio Analysis - Easy To Remember

    Uploaded by

    KhushbuJ
    9K views3 pages
    The document discusses various types of financial ratios used for analysis including: activity ratios, liquidity ratios, solvency ratios, profitability ratios, and valuation/investment ratios. It provides the formulas and definitions for numerous individual ratios within each category such as current ratio, debt-to-equity ratio, return on assets, and price-to-earnings ratio. The ratios measure aspects of a company's operations, liquidity, debt levels, profitability, and stock valuation.

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    Ratio Analysis - Easy to Remember

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    The document discusses various types of financial ratios used for analysis including: activity ratios, liquidity ratios, solvency ratios, profitability ratios, and valuation/investment ratios. It provides the formulas and definitions for numerous individual ratios within each category such as current ratio, debt-to-equity ratio, return on assets, and price-to-earnings ratio. The ratios measure aspects of a company's operations, liquidity, debt levels, profitability, and stock valuation.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    9K views3 pages

    Ratio Analysis - Easy To Remember

    Uploaded by

    KhushbuJ
    The document discusses various types of financial ratios used for analysis including: activity ratios, liquidity ratios, solvency ratios, profitability ratios, and valuation/investment ratios. It provides the formulas and definitions for numerous individual ratios within each category such as current ratio, debt-to-equity ratio, return on assets, and price-to-earnings ratio. The ratios measure aspects of a company's operations, liquidity, debt levels, profitability, and stock valuation.

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    Download as PDF, TXT or read online from Scribd
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    Ratios-Tools for financial analysis

    Types of Ratios

    Activity

    Liquidity

    Valuation/Investment
    Solvency Profitability

    Activity Ratios

    Ratio Numerator Denominator


    Inventory turnover COGS Average Inventory

    Days of Inventory on hand Number of days in a period Inventory turnover


    (DOH)
    Receivables turnover Revenues Average Receivables

    Days of Sales Number of days in a period Receivables turnover


    Outstanding(DSO)
    Payables Turnover Revenues Average Payables

    Days of payables Number of days in a period Payables Turnover


    outstanding(DPO)

    Working Capital turnover Revenues Average working capital

    Fixed Asset turnover Revenues Average fixed assets

    Total asset turnover Revenues Average Total assets


    Liquidity Ratios

    Ratio Numerator Denominator


    Current Ratio Current Assets Current Liabilities
    Quick Ratio Cash+ Short term Marketable Current Liabilities
    securities+ Receivables

    Cash Ratio Cash+ Short Term Marketable Current Liabilities


    Securities

    Cash Conversion Cycle DOH+DSO-DPO

    Solvency Ratios

    Ratio Numerator Denominator

    Debt-to-assets Total debts Total assets

    Capitalization Ratio Total debt Total Debt+ Total Equity

    Debt-to-equity or capital Total debt Total Equity


    gearing ratio

    Financial Leverage Ratio Average Total assets Average Total Equity

    Interest Coverage EBIT Interest expense

    Profitability Ratios

    Ratio Numerator Denominator

    Gross Profit Margin Gross Profit Revenues

    Operating Profit Margin O/P Profit Revenues

    Pre-tax Profit Margin PBT Revenues

    Net Profit Margin PAT Revenues

    ROA Net Income Average Total assets

    *ROE Net Income Average Total Equity


    Investment/Valuation Ratios

    Ratio Numerator Denominator

    EPS Net income-Preferred Dividends Weighted average number of


    shares outstanding

    P/E Price per share EPS

    Cash Flow per share CFO Average number of shares


    outstanding

    Dividend Payout Ratio Dividend per share EPS

    Dividend Retention Ratio (r) 1-Dividend Payout Ratio

    Sustainable growth rate(g) r * ROE

    *DuPont Analysis-Decomposition of ROE

    ROE= Net Income/Average Total Equity

    = (Net Income/Average Total assets) *(Average Total assets/Average Total Equity)

    = ROA * Leverage

    Or

    ROE= Net Income/ Average Total Equity

    = (Net Income/Revenue)*(Revenue/Average Total assets)*(Average Total assets/Average Total


    Equity)

    = Net Profit Margin *Asset turnover *Leverage

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