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Asset, Profitability and Debt Ratio (Profitability Ratios (Return on…
Asset, Profitability and Debt Ratio
Asset Turn Over Ratio
Eg: the stock we have, how often does that stock turn over?
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Profitability Ratios
It helps us asses how profitable our business is, how we are performing
It is used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time
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Return on Equity (ROE)
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Measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested
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Debt Ratios
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The greater the amount of debt held by a company, the greater the financial risk of bankruptcy
Debt Ratio
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The higher the ratio, the more leveraged the company and the greater its financial risk
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Debt Equity Ratio
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It is the measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the stakeholders have committed
It compares total liabilities to shareholders' equity (as opposed to total assets in the debt ratio)
A lower the percentage means that a company is using less leverage and has a stronger equity position