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    Ratios For Financial Statement Analysis: Current Ratio

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    ateeb1
    The document defines and provides formulas for various ratios used in financial statement analysis. It discusses ratios to analyze liquidity, profitability, activity, capital structure, and capital markets. Ratios covered include the current ratio, quick ratio, return on assets, return on equity, assets turnover ratio, debt to equity ratio, price earnings ratio, and dividend yield among others. The ratios are calculated using information from a company's income statement, balance sheet, and statement of cash flows.

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    Ratios For Financial Statement Analysis: Current Ratio

    Uploaded by

    ateeb1
    24 views3 pages
    The document defines and provides formulas for various ratios used in financial statement analysis. It discusses ratios to analyze liquidity, profitability, activity, capital structure, and capital markets. Ratios covered include the current ratio, quick ratio, return on assets, return on equity, assets turnover ratio, debt to equity ratio, price earnings ratio, and dividend yield among others. The ratios are calculated using information from a company's income statement, balance sheet, and statement of cash flows.

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    The document defines and provides formulas for various ratios used in financial statement analysis. It discusses ratios to analyze liquidity, profitability, activity, capital structure, and capital markets. Ratios covered include the current ratio, quick ratio, return on assets, return on equity, assets turnover ratio, debt to equity ratio, price earnings ratio, and dividend yield among others. The ratios are calculated using information from a company's income statement, balance sheet, and statement of cash flows.

    Copyright:

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

    Ratios For Financial Statement Analysis: Current Ratio

    Uploaded by

    ateeb1
    The document defines and provides formulas for various ratios used in financial statement analysis. It discusses ratios to analyze liquidity, profitability, activity, capital structure, and capital markets. Ratios covered include the current ratio, quick ratio, return on assets, return on equity, assets turnover ratio, debt to equity ratio, price earnings ratio, and dividend yield among others. The ratios are calculated using information from a company's income statement, balance sheet, and statement of cash flows.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 3

    Ratios for Financial Statement Analysis

    Liquidity Analysis Ratios

    Current Ratio Current Ratio =

    Current Assets -----------------------Current Liabilities

    Quick Ratio Quick Ratio =

    Quick Assets ---------------------Current Liabilities

    Quick Assets = Current Assets - Inventories Net Working Capital Ratio Net Working Capital Ratio =

    Net Working Capital -------------------------Total Assets

    Net Working Capital = Current Assets - Current Liabilities

    Profitability Analysis Ratios Return on Assets (ROA) Return on Assets (ROA) =

    Net Income ---------------------------------Average Total Assets

    Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 Return on Equity (ROE) Return on Equity (ROE) =

    Net Income -------------------------------------------Average Stockholders' Equity

    Average Stockholders' Equity = (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2 Return on Common Equity (ROCE) Return on Common Equity (ROCE) =

    Net Income -------------------------------------------Average Common Stockholders' Equity

    Average Common Stockholders' Equity = (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity) / 2 Profit Margin Profit Margin =

    Net Income ----------------Sales

    Earnings Per Share (EPS) Earnings Per Share (EPS) =

    Net Income --------------------------------------------Number of Common Shares Outstanding

    Activity Analysis Ratios Assets Turnover Ratio

    Sales

    Assets Turnover Ratio =

    ---------------------------Average Total Assets

    Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 Accounts Receivable Turnover Ratio Accounts Receivable Turnover Ratio =

    Sales ----------------------------------Average Accounts Receivable

    Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 Inventory Turnover Ratio Inventory Turnover Ratio =

    Cost of Goods Sold --------------------------Average Inventories

    Average Inventories = (Beginning Inventories + Ending Inventories) / 2

    Capital Structure Analysis Ratios Debt to Equity Ratio Debt to Equity Ratio =

    Total Liabilities ---------------------------------Total Stockholders' Equity

    Interest Coverage Ratio Interest Coverage Ratio =

    Income Before Interest and Income Tax Expenses ------------------------------------------------------Interest Expense

    Income Before Interest and Income Tax Expenses = Income Before Income Taxes + Interest Expense

    Capital Market Analysis Ratios Price Earnings (PE) Ratio Price Earnings (PE) Ratio =

    Market Price of Common Stock Per Share -----------------------------------------------------Earnings Per Share

    Market to Book Ratio Market to Book Ratio =

    Market Price of Common Stock Per Share ------------------------------------------------------Book Value of Equity Per Common Share

    Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares Dividend Yield Dividend Yield =

    Annual Dividends Per Common Share -----------------------------------------------Market Price of Common Stock Per Share

    Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares Dividend Payout Ratio Dividend Payout Ratio =

    Cash Dividends -------------------Net Income

    ROA = Profit Margin X Assets Turnover Ratio ROA = Profit Margin X Assets Turnover Ratio Net Income ROA = ------------------------ = Average Total Assets Profit Margin = Net Income / Sales Assets Turnover Ratio = Sales / Averages Total Assets

    Net Income -------------- X Sales

    Sales -----------------------Average Total Assets

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