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Financial Ratios, Return on Assets (ROA) = Net Income / Total Assets -…
Financial Ratios
Financial Leverage ratios
(Long-Term Solvency)
Total Debt Ratio =
(Total debt) (Total Assets – Total Equity) / Total Assets
Debt-Equity Ratio (D/E) =
Total Debt / Total Equity
Equity Multiplier =
Total Assets / Total Equity OR 1 + D/E ratio
Times Interest Earned Ratio (TIE ratio) =
EBIT / Interest
Cash Coverage Ratio =
(EBIT + Depreciation) / Interest
Market Value Ratios
Earnings per share (EPS) =
Net Income / Shares Outstanding
Price Earnings Ratio =
Price per share / EPS
Market-to-Book Ratio =
Market value per share / Book value per share
Dividends per share =
Total dividends / Shares Outstanding
Book value per share =
Total Equity / Shares outstanding
Profitability Ratios
Gross Profit Margin =
(Sales – COGS) / Sales
Operating Profit Margin =
EBIT / Sales
Net Profit Margin =
Net Income / Sales
Return on Equity (ROE) =
Net Income / Total Equity
Liquidity Ratios
(Short-term solvency ratios)
Current Ratio =
Current Assets / Current Liabilities
Quick Ratio (Acid Test) =
(Current Assets – Inventory) / Current Liabilities
Cash Ratio =
Cash / Current Liabilities
Asset Management OR
Turnover Ratios
Inventory Ratios
Inventory Turnover
=
COGS / Inventory
Days’ Sales in Inventory =
365 / Inventory Turnover
Receivables Ratios
Receivables Turnover =
Sales / AR
Average Collection Period
=
365 / Receivables Turnover
Total Asset Turnover Ratio (TAT)
=
Sales / Total Assets
The Dupont Identity
ROE =
NI / Total Equity
ROE =
ROA x Equity Multiplier
ROE =
Profit Margin x Total Asset Turnover x Equity Multiplier
Return on Assets (ROA) =
Net Income / Total Assets