1 Return on sale = Net income/sales Number of pennis earned during the year by 1$ sale

2 Debt ratio= Total libilities/total assets % funds needed to purchase assets that were obtaine

3 Current ratio= total current asset/total current liabilities Measure liquidity, number of time current a

4 Asset turnover= sales/total assets Number of dollar of sales during each year using one d

5 Return on equity= net income/stock holder's equity Number of pennis earned during year by ea

6 Price-earning ratio= market value of shares/net income Amount investor are willing pay
market value of shares/earnings per share

7 Return on asset= net income/total asset Number of pennis of net income generated by each $

8 Analysis of ROE using DuPONT frame work

9 ROE= Profitability x efficiency x Leverag Also PAT/Net worth (Capital+re

return on sale Asset asset to
turnover equity
ratio
=net income = Sales = Assets
sales Assets Equity
Return on sales Number of pennis of profit generated by each dollar of sale
Asset turnove Number of dollar of sales during each year using one dollar of asset.
Asset to equity ratio Number of dollars of assets acquired by each dollar invested by stockholder

Efficiency Ratios

10 Avg collection period = avg receivables outstanding/avg daily Sales Avg number of days that elapse

11 Number of days sales in inventories= avg inventory/avg daily cost of goods sold

12 Fixed asset turnover =Sales /avg fixed asset. Means number of dollars of sales which is generated b

13 Margin vs Turnover = Porfitability of each dollar sale is called MARGIN & degree to which assets are use

LEVERAGE RATIO
It’s a indication of the extent at which company is using other people money to purchase the assets.
Leverage is borrowings what company takes that allows company to purchase more assets than its stockholders a

14 Asset to equity ratio Total asset/no of equity Number of dollars of assets acquired by each dollar in

Three main ratios

15 Debt ratio Total liabilities/total assets. It is interpreted as % of total funds, both borrowed and
16 Debt to equity ratio Total liabilities/total equities. It is intepreted as number of dollar of borrowing to eac

17 Times interest earned =PBDIT/interest expenses. number of time interest payment cud be covere by ope

18 Acid test Quick asset/quick liabilities. This means that assets which can be liquidated in very shor

19 Total debt/Total asset

20 Debt Service Coverage Ratio (DSCR) = PBDIT - Tax

Interest + Annual Repayment of Principal

21 Interest Coverage Ratio = PBDIT / Interest For every one rupee of interest, how much you are ea

EFFICIENCY RATIOS - TIME IS MONEY

Receivables (No of Days) = Receivables / Sales per Day

Inventories (No of Days) = Inventories / Mfg Cost per Day

Cash (No of Days) = Cash / Sales per Day

PROFITABILITY
Margins (profits in relation to Sales)
Returns (profits in relation to Investments)

Gross Margin = Gross Profit / Net Sales %

Operating Profit Margin = PBDIT / Net Sales (there could be various definitions, this
being a common one) EBIDTA = PBDIT %

Net Profit Margin = PAT / Net Sales

Return on Capital Employed (ROCE) = PBIT / CE=Capital employed=share holder's equity+debt

EPS=Earing per share=PAT/No of shares

PE = Price Earnings Multiple = Share Price / EPS This tells you how expensive or how cheap the share i

Book Value per Share = Net Worth / No of Shares

Price to Book Ratio This is an index of Wealth Creation or Wealth Destruction

Dividend per Share = Dividend / No of Shares

Dividend % in India = Dividend per Share / Face Value

Dividend Payout = Dividend / PAT

Dividend Yield = Dividend / Market Price
rned during the year by 1$ sale

urchase assets that were obtained through borrowings

iquidity, number of time current asset could cover current liability

ales during each year using one dollar of asset.

f pennis earned during year by each dollar invested.

Amount investor are willing pay for each dollar of earnings; indicaiton of growth potential

net income generated by each $ of asset

Also PAT/Net worth (Capital+reserves)

ollar of asset.
ested by stockholder

Avg number of days that elapsed between actual sale & cash collection

it means avg number of days of sales can be made using only supply of inventory in hand.

lars of sales which is generated by 1 dollat asset.

degree to which assets are used to generate sales are called TURNOVER

rchase the assets.

ore assets than its stockholders are able to pay for though their own investment.

assets acquired by each dollar invested by stockholder

of total funds, both borrowed and invested, that a company acquires though borrowings.
mber of dollar of borrowing to each dollar of equity investment.

st payment cud be covere by operating earning

ich can be liquidated in very short time & liabilities that are to be paid fast.

For every one rupee that I have to pay to the bank (for interest plus repayment), how much I m earning

of interest, how much you are earning

r's equity+debt

pensive or how cheap the share is / market is