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CATEGORIES OF FINANCIAL RATIOS - Coggle Diagram
CATEGORIES OF FINANCIAL RATIOS
LEVERAGE RATIO ( how a firm is debt)
debt ratios ( better to have a high ratio or low ratio )
cash coverage ratio (better to have a high ratio or low ratio ???)
MARKET RATIO
Price/earnings ratio > high ratio, it means investors believe that the company has good growth opportunities, company is less risky than other companies, earnings are only temporarily low
Market to book value ratio > sum of the share capital, reserves and retained earnings.
Dividend yield > high ratio, investors earn thanks to dividends, low they earn thanks to capital gains based on stock price.
EFFICENCY RATIO
DAYS IN INVENTORY (low ratio)
AVERAGE COLLECTION PERIOD > describes the time in terms of days the firm needs to collect the payments (low ratio)
ASSET TURNOVER RATIO > describes the intensity of exploitation of a firm's assets
LIQUIDITY RATIO (how our firm can have cash or collect cash)
current ratio > better to have a higher ratio
quick ratio > better to have a higher ratio
incidence of net working capital on total assets > the higher the ratio the more liquid the firm
cash ratio
PROFITABILITY RATIO
RETURN ON EQUITY (ROE)
RETURN ON ASSET (ROA)
RETURN ON SALES (ROS)
PAYOUT RATIO