FINANCIAL RATIOS

Liquidity Ratios
Current Ratio = Current Assets
Current Liabilities

Quick (or Acid) Ratio = (Current Assets – Inventory)

Current Liabilities

Cash Flow Ratio = Operating Cash Flow

Current Liabilities

Asset Management Ratios

Total Asset Turnover = Sales
(Average) Total Assets

Fixed Asset Turnover = Sales

(Ave)Fixed Assets

Accounts Receivable Turnover = Sales or Credit Sales

(Ave) Acc. Rec.

Inventory Turnover = Cost of Goods sold

Inventory

Days sales in Receivables = Accounts Receivable

or Ave. Collection Period Average sales per day
or Days Sales Outstanding (DSO)

Days sales in Inventory = Inventory

Average sales (or COGS) per day

Debt Management Ratios -Capital structure

Total Debt Ratio = Total Assets – Total Equity = Total Debt
Total Assets Total Assets

Debt to Equity Ratio = Total Debt

Total Equity

Equity Multiplier = Total Assets = 1 + Debt to equity ratio

Total Equity

1
TIE = EBIT/Interest

Fixed Charges Coverage = EBIT/ (Int. Exp. + Lease payments)

Cash Coverage = (EBIT + Depreciation)/Interest

Profitability Ratios
Gross Profit Margin = Revenues – Cost of Goods Sold
or Net Profit Ratio Net Sales

Profit Margin on Sales = Net Income after Tax

Net Sales

Return on Total Assets (ROA) = NIAT

(Ave) Total Assets
= or Profit Margin X Asset Turnover

Return on Common Equity (ROE) = Net Income after Tax

(Average) Total Equity
= Return on Assets X Equity Multiplier

Return on Capital Employed = Net Income after Tax

(ROCE) Total Capital

Basic Earning Power Ratio = Earnings before Interest & Tax

(BEP) Total Assets

Market Value Ratios

Earnings per Share = Net Income for common shareholders
Total # of common shares outstanding

Price/Earnings (P/E) Ratio = Market Price per Share

Earnings per Share

Market to Book Value = Market Price per Share

Book Value per Share

Market to Cash Flow = Market Price per Share

Cash Flow per Share

Book Value per share = Total Common Equity

Total # of common shares