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CHAPTER 5 – RATIOS AND OTHER TOOLS FOR ANALYZING - Coggle Diagram

- - - - This ratio is reported as a number instead of a percentage and the information can be taken from the income statement.
- - - - The formula for the Net Revenue is: Net Revenue = Gross Revenue – Sales Returns
        The formula for the Average Fixed Assets is: Averaged Fixed Assets = (Opening + Ending Balances of Fixed Assets) / 2
        
        Working Capital Turnover Ratio: All businesses what to know how their hard work is working for them. With this ratio, you can measure the revenue generated from the dollars invested in the working capital. When we look at the working capital it is the amount of current assets that exceed the current liabilities.
        
        The formula for the Working Capital Turnover Ratio is: Working Capital Turnover Ratio = Revenue / Average Working Capital
        
        The formula for the Working Capital is: Working Capital = Current Assets – Current Liabilities
        
        The formula for the Average Working Capital is: Average Working Capital = (Opening + Closing Working Capital) / 2
      - Cash Flow Ratios
        Cash Flow Ratios are mainly used for assessing the quality of earnings of your business. They may also be referred to as performance ratios. Keep in mind; the net income information is based on the accrual concept; therefore, it will be subject to significant judgment from the management. That means, it will also provide a more unbiased assessment.
        
        The formula for the EBIDTA Coverage Ratio is: EBIDTA Coverage Ratio = (EBITDA + Lease Payments) / (Interest Payments + Principal Repayments + Lease Payments)
        The formula for the EBITDA is: EBITDA = Net Income + Tax + Interest + Depreciation + Amortization