Ratio

Flexibility

Investment

Profitability

Gearing

Financial efficiency

Current:


Current Asset/
Current Liabilities

Dividend yield

Gearing: (Non-Current Liabilities/ Capital employed) X 100

Inventory turnover

Operating profit ratio: operating profit(profit from operations)/revenue X 100

Acid Test: Liquid Assets/Current Liabilities

measures a company's short-term liquidity and its ability to cover immediate obligations with its current assets. A ratio greater than 1 indicates that the company has more assets than liabilities due in the short term.

Similar to the current ratio, the quick ratio provides a more stringent measure of a company's ability to meet short-term obligations by excluding inventory, which may not be easily converted to cash.

Return on capital employed: (Operating profit/ Capital employed) X 100

Trade turnover

Rate of inventory turnover: Cost of sales/Average inventory

Average inventory: Inventory at start of the year + Inventory at the end end of year/ 2

Trade receivable turnover: (Trade receivables/ Credit sales)X 365

Trade payables turnover: (Trade payables/Credit purchases) X 365

Price/earnings

Dividend per share: Total annual dividends/Total number of issued shares

Dividend yield ratio: (Divided per share/Market share price)X 100

P/E: Market share price/ earnings per share

Earnings per share: profit for the year/number of shares issued

Measures the percentage of each sale remaining after all costs and expenses other than interest, taxes, and expenses other than interest, taxes, and preferred stock dividends are deducted.

Help to understand how well a company is generating profits from its capital as it is put to use.

Gross Profit Margin:Operating profit margin: operating profit (profit from operations)/revenue X 100

Measures the percentage of each sale remaining after the firm has paid for its goods

Measures the amount that investors are willing to pay for each profit of a business's earnings. The higher the P/E ratio, the greater the investor's confidence in investing.

The amount of profit after tax and interest earned per share.

indicates the return on investment through dividends. It's relevant for income-seeking investors and reflects the company's dividend distribution policy.

Measures how many times a company's inventory is sold and replaced over a specific period. A higher ratio indicates efficient inventory management, reducing holding costs and potential obsolescence. It helps in optimizing stock levels and improving cash flow.

A simple calculation of finding the average amount of inventory throughout the entire year, though it's a crucial figure used in various financial ratios and performance metrics. It provides a more accurate representation of the inventory investment over a given time frame

Assesses how quickly a company collects payments from its customers. A higher ratio implies effective credit management, timely collection, and faster conversion of receivables into cash. This can enhance liquidity and reduce the risk of bad debts.

Measures how many times, on average, a company pays its accounts payable during a specific period. It reflects the efficiency of payment policies and the speed at which a company settles its outstanding trade payables.

Financial metric that assesses the proportion of a company's capital that is funded by debt compared to equity. It provides insights into the level of financial leverage or gearing a company has

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it indicates the number of times that a company can pay dividends to shareholders from its total income. A result above 1.5 is ideal. Not measured in %.

Interest Cover:Earnings before interest and taxes(EBIT) / Interest Expense

Often used alongside the gearing ratio, it is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. ( lots of unpaid loans.)
The higher the ratio (%) the lower the risk to investors.

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