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Acid Test
Acid Test
This ratio indicates whether the firm has sufficient short-term assets to cover its
short-term liabilities.
https://www.investopedia.com/terms/a/acidtest.asp
Cash ratio
This ratio measures the company’s liquidity, specifically the ratio of a company's total cash and cash
equivalents to its current liabilities.
https://www.investopedia.com/terms/c/cash-ratio.asp
profitability ratio
This ratio assesses a firm’s ability to generate earnings relative to its revenue, operating costs, balance
sheet assets, or shareholders' equity over time, using data from a specific point in time.
https://www.investopedia.com/terms/p/profitabilityratios.asp
This ratio assess a company's financial health by calculating the amount of money left over from product
sales after subtracting the cost of goods sold
ROA
This ratio indicates how profitable a company is relative to its total assets.
https://www.investopedia.com/terms/r/returnonassets.asp
ROE
EBITDA
This ratio measures a company's operating profit as a percentage of its revenue.
https://www.investopedia.com/terms/e/ebitda-margin.asp
Interest coverage
This ratio determines how easily a company can pay interest on its outstanding
debt.
https://www.investopedia.com/terms/i/interestcoverageratio.asp
Solvency Ratio
This ratio indicates whether a company’s cash flow is sufficient to meet its long-
term liabilities and thus is a measure of its financial health.
https://www.investopedia.com/terms/s/solvencyratio.asp
This ratio evaluates a company's financial leverage and is calculated by dividing a company’s total
liabilities by its shareholder equity.
https://www.investopedia.com/terms/d/debtequityratio.asp
Equity Ratio
This ratio measures the amount of leverage used by a company. It determines how successfully a firm
manages its debts and funds its asset requirements by looking at asset investments and equity.
https://corporatefinanceinstitute.com/resources/knowledge/finance/equity-ratio/
i. Debt Ratio
This ratio assesses a company's profitability and capital efficiency. This ratio can help to understand how
well a company is generating profits from its capital as it is put to use.
https://www.investopedia.com/terms/r/roce.asp
a. Efficiency
This ratio measures a company's ability to use its assets to generate income.
https://www.investopedia.com/terms/e/efficiencyratio.asp
https://www.investopedia.com/terms/r/receivableturnoverratio.asp
i. Equity Turnover
This shows how many times a company pays off its accounts payable during a
period.
https://www.investopedia.com/terms/a/accountspayableturnoverratio.asp
1. Common Sizing
Balance Sheet
This reports a company's assets, liabilities, and shareholder equity.
https://www.investopedia.com/terms/b/balancesheet.asp
Income Statement
Breakeven
This tells you how many units of a product must be sold to cover the fixed and
variable costs of production.
https://www.investopedia.com/terms/b/breakevenanalysis.asp