Financial Ratios

‫النسب المالية‬
 Types of financial ratios
1

Profitability Ratios Leverage Ratios

‫نسب الربحية‬ 2
‫نسب الرافعه الماليه‬

Operating Ratio Valuation Ratios

‫نسب التشغيل‬ 4
‫نسب التقييم المالية‬

Liquidity Ratios Market Ratios

‫نسب السيولة‬ 6 ‫نسب السوق‬

Capital budgeting Ratios Solvency Ratios

‫نسب موازنة رأس المال‬ 8 ‫نسب المالءة‬

Return Ratios Efficiency Ratios

‫نسب العائد‬ ‫نسب الكفاءة‬
10

11

Coverage Ratios Growth Ratios

‫نسب التغطية‬ 12
‫نسب النمو‬

13

Payout Ratios Turnover Ratios

‫نسب التوزيعات النقدية‬ ‫نسب معدالت الدوران‬
14
Profitability
Ratios
‫نسب الربحية‬
 Profitability ratio

Margin Return
ratio ratio

Gross profits EBIDTA Return on asset Return on

invested
ROA = Net
Gross Profit EBITDA Income /
capital
ROI = Net Income
Margin = margin = Average Assets / Cost of
(Revenue – Cost EBITDA/Sales or Investment
of Goods Sold) / ROA = Net or
*100.
Revenue x 100 Income / End of ROI = Investment
Period Assets Gain / Investment
Base

Operating Net profit Return on

profit Equity
Operating Net Profit
Margin= Margin = Net ROE = Net
operating Income /
Profit ⁄ Total
Shareholders’
profit/Revenue Revenue x 100 Equity

Cash flow

Operating
cash flow
ratio = CFO
/ liabilities
‫‪Leverage Ratios‬‬
‫نسب الرافعه‬
‫الماليه‬
 1. Debt-to-Assets Ratio =
Total Debt / Total Assets

2. Debt-to-Equity Ratio =
Total Debt / Total Equity

3. Debt-to-Capital Ratio =
Total Debt / (Total Debt +
Total Equity)

4. Debt-to-EBITDA Ratio =
Total Debt / Earnings Before
Interest Taxes Depreciation
& Amortization (EBITDA)

5. Asset-to-Equity Ratio =
Total Assets / Total Equity
Operating Ratio
‫نسب التشغيل‬
 The operating margin is the
ratio between a company’s
operating profit (i.e. EBIT) and
revenue, expressed as a
percentage

Operating Margin (%) = EBIT

÷ Revenue

The operating income of a company can be

calculated by subtracting operating expenses
(OpEx) from gross profit, which has already been
reduced by the cost of goods sold (COGS) in the
period.
‫‪Valuation Ratios‬‬
‫نسب التقييم‬
‫المالية‬
Valuation ratio is conducted to
decide whether the stock of a
company is currently selling at
attractive, fair or expensive
(overvalued) valuations.

Price/Sales Ratio=
Market Capitalization /
Annual Revenue

Price-to-Book Ratio
(P/B) = Market
Capitalization / Book
Value of Equity

Price to Earnings Ratio =

Share Price / Earnings
Per Share
Liquidity Ratios
‫نسب السيولة‬
A liquidity ratio is a type of financial
ratio used to determine a company’s
ability to pay its short-term debt
obligations. The metric helps
determine if a company can use its
current, or liquid, assets to cover its
current liabilities.

Current Ratio = Current Assets

/ Current Liabilities

Quick Ratio = (Cash + Accounts

Receivables + Marketable
Securities) / Current Liabilities

Cash Ratio = (Cash +

Marketable Securities) /
Current Liabilities
Market Ratios
‫نسب السوق‬
Market value ratios are financial metrics
that measure and analyze stock prices
and compare market prices with those of
competitors and against other facts and
figures. These ratios track the financial
performance of public companies to
understand their position in the market.

Market Value Per Share = Total

capitalization of the business /
Number of shares outstanding

Market to book ratio = Market price

per share / Book value per share

Dividend Yield = Annual dividend

per share / Stock price of each share

Earnings Per Share = (Net income -

Preferred dividends) / Number of
equity shares outstanding
 Capital
budgeting
Ratios
‫نسب موازنة رأس‬
‫المال‬
 Capital budgeting, which is also called
"investment appraisal," is the planning
process used to determine which of an
organization's long term investments
such as new machinery, replacement
machinery, new plants, new products,
and research development projects are
worth pursuing. It is to budget for major
capital investments or expenditures.

Net present value

Internal rate of return
Payback period
Profitability index
Equivalent annuity
Real options analysis
Solvency Ratios
‫نسب المالءة‬
 A Solvency Ratio assesses a company’s
ability to meet its long-term financial
obligations, or more specifically, the
repayment of debt principal and interest
expense.
Return Ratios
‫نسب العائد‬
 An investment is made by any business to obtain
returns. These returns are analyzed using Return
Ratios that measure how effectively an investment
is being managed. They help to evaluate if the
highest possible return is being generated on an
investment. For understanding this, we will try to
understand key return ratios given as under

Return on Equity = Net Income / ​

Average Shareholders’ Equity

ROCE (return on capital Employed) =

EBIT​/ Capital Employed

ROIC (return on invested capital) =

NOPAT (Net operating profit after
tax) / Invested Capital

ROIC = (net income – dividends) /

(debt + equity).
 Efficiency
Ratios
‫نسب الكفاءة‬
The efficiency ratio is typically used to analyze how
well a company uses its assets and liabilities
internally. An efficiency ratio can calculate the
turnover of receivables, the repayment of liabilities,
the quantity and usage of equity, and the general
use of inventory and machinery. This ratio can also
be used to track and analyze the performance of
commercial and investment banks.
Coverage Ratios
‫نسب التغطية‬
 Present Value of Unlevered Free Cash
Loan Life Coverage Ratio (LLCR)
Flows/Total Loan Amount

Coverage ratios are a set of financial

ratios that measure the ability of a
company to meet its debt servicing
obligations. Such ratios are commonly
used by lenders and creditors to analyze
a company’s debt servicing ability and
financial standing. While leverage ratios
focus on the balance sheet of a company,
coverage ratios focus on the income
statement and cash flows. The common
coverage ratios are the debt service
coverage ratio (DSCR), loan life coverage
ratio (LLCR), interest coverage ratio
(ICR), cash coverage ratio (CCR), and the
asset coverage ratio (ACR).
Growth Ratios
‫نسب النمو‬
 Growth ratios
indicate how
fast a company
or its business
is growing.
These ratios
measure the
rate at which
the company is
growing.
‫‪Payout Ratios‬‬
‫نسب التوزيعات‬
‫النقدية‬
 The payout ratio is a financial
metric that shows the
proportion of earnings a
company pays its shareholders
in the form of dividends. It's
expressed as a percentage of
the company’s total earnings
but it can refer to the dividends
paid out as a percentage of a
company’s cash flow in some
cases. The payout ratio is also
known as the dividend payout
ratio.
‫‪Turnover Ratios‬‬
‫نسب معدالت‬
‫الدوران‬
 Inventory turnover refers to the amount of
time that passes from the day an item is
purchased by a company until it is sold. One
complete turnover of inventory means the
company sold the stock that it purchased, less
any items lost to damage or shrinkage.