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Liquidity ratios measure the company’s ability to meet its
short-term obligations and how quickly assets are converted
into cash. The following table explains how to calculate the
major liquidity ratios.
Liquidity Ratios
Profitability ratios measure the company’s ability to
generate profits from its resources (assets). The table below
shows the calculations of these ratios.
Profitability Ratios
Solvency ratios measure a company’s ability to meet long-term
obligations. Subsets of these ratios are also known as “leverage”
and “long-term debt” ratios.
Solvency Ratios
Valuation ratios measure the quantity of an asset or flow
(i.e., earnings) associated with ownership of a specified claim
(i.e., a share or ownership of the enterprise). The following
tables show the most of the common valuation ratios.
Valuation Ratios
Inventory turnover
Days of inventory on hands (DOH)
Receivables turnover Revenue or Revenue from credit sales Average receivables Number of days Receivable turnover Purchases Average payables Number of days in a period Payable turnover Revenue Average working capital Revenue Average fixed assets Revenue Average total assets
Days of sales outstanding (DSO)
Payable Turnover
Number of days of payables
Working capital turnover
Fixed assets turnover
Total assets turnover
Activity Ratios Ratio calculation
Activity ratios measure how efficiently a company performs
day-to-day tasks, such as the collection of receivables and
management of inventory. The table below clarifies how to
calculate most of the activity ratios.
Activity Ratios
Total debt Total shareholders’ equity Average total assets Total shareholders’ equity
Debt-to-assets
Dept-to-capital
Dept-to-equity
Financial leverage
Solvency ratios Ratio calculation
EBT (Earnings Before Taxes) Revenue Net income Revenue
Gross profit margin
Operating margin
Pretax margin
Net profit margin
Return on sales ratios Ratio calculation
EBIT
Debt + Equity Net income Average total equity
Net income - Preferred dividends
Average common equity
Opearting ROA
ROA
Return on total capital
ROE
Return on common equity
Return on investment ratios Ratio calculation
Interest coverage
Fixed charge coverage
Coverage Ratios Ratio calculation
Cash + Short term marketable securities Current liabilities
Cash + Short term marketable securities + Receivables
Daily expenditures
DOH + DSO - Number of days of payables
Current
Quick
Cash
Defensive interval
Cash conversion cycle
Liquidity ratios Ratio calculation
Page 1
Financial Ratios Sheet
Cost of goods sold Average inventory Number of days in period Inventory turnover
Current assets Current liabilities
Cash + Short term marketable securities + Receivables
Current liabilities
Total debt Total assets Total debt
Total debt + Total shareholders’ equity
Gross profit Revenue Operating profit Revenue
Operating income Average total assets Net income Average total assets
EBIT
Interest payements
EBIT + Lease payements
Interest payements + Lease payements
Solvency ratios measure a company’s ability to meet long-term
obligations. Subsets of these ratios are also known as “leverage”
and “long-term debt” ratios.
Solvency Ratios
Segment ratios are important for segment reporting.
Remember that a company doesn’t have to disclose
information about all of its segments; they only need to be
disclosed if that segment constitutes 10 percent or more of
the combined operating segments' revenue, assets, or profit.
If the revenue of the reported segments is less than 75% of
the revenue of the entire company, more segments must be
reported until the 75% level is reached.
Segment Ratios
Leverage ratios measure the extent to which a company uses
liabilities rather than equity to finance its assets
Leverage Ratios
Price per share Sales per share Price per share Book value per share
P/E
PC/F
P/S
P/BV
Valuation ratios Ratio calculation
Total debt Total equity Average total assets Average equity
Debt-to-assets ratio
| Debt is defined as the sum of interest-bearing short-term and long-term debt.
A
A
A
A
Debt-to-capital ratio
Debt-to-equity ratio
Financial leverage ratio
Leverage Ratios
Segment margin
Segment turnover
Segment ROA
Segmentt debt ratio
Segment ratio
Segment profit (loss)
Segment revenue
Segment profit (loss)
Segment liabilities
Numerator
Segment revenue
Segment assets
Segment assets
Segment assets
Denominator Measures a segment’s profitability relartive to its revenues Measures a segment’s ability to generate revenue using assets Measures a segment’s operating profitability relative its assets Measures a segment solvency
Indication
CFO - Capital expenditures - Dividend paid Total debt FFO - Dividends Capital expenditures
FFO (Funds from operations) to debt
Free operating cash flow-to-debt
Discretionary cash flow-to-debt
Net cash flow-to-capital expenditures
b x ROE
Dividend payout ratio
Retention rate (b)
Sustainable growth rate
Dividend - related ratios Ratio calculation
CFO - Preferred dividends Weighted average number of ordinary shares outstanding
EBITDA Average number of common stock
Dividends paid Number of shares outstanding
Basic EPS
Diluted EPS
Cash flow per share
EBITDA per share
Dividends per share
Price per share Ratio calculation
EBIT interest coverage
Price per share Ratio calculation
EBITDA interest coverage
FFO (funds from operations) interest coverage
Price per share Ratio calculation
Return on capital
Page 2
Financial Ratios Sheet
Price per share Earnings per share Price per share Cash flow per share
Total debt Total assets Total debt Total debt + Total equity
FFO
Total debt CFO (adjusted) - Capital expenditures Total debt
Common share dividends Net income attributable to common shares
Net income attributable to common shares
- Common share dividends Net income attributable to common shares
Net income - Preferred dividends Weighted average number of ordinary shares outstanding
Net income - Preferred dividends
- Aftertax interest on ordinary shares outstanding Weighted average number of ordinary shares outstanding
- Number of common shares that would have been issued at conversion
EBIT
Gross interest (prior to deductions for capitalized interest or interest income)
EBITDA
Gross interest (prior to deductions for capitalized interest or interest income)
FFO + Interest paid - Operatinf lease adjustments Gross interest (prior to deductions for capitalized interest or interest income)
EBIT
Average capital
where Capital = Equity + Non-current deffered taxes + Debt
