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Financial Analysis - Coggle Diagram

- - - - Measures a company's ability to meet its short-term financial obligations
      - Typically, a ratio of 2-3 is considered good
      - Current ratio = Total current assets / Total current liabilities
    - - Only assets that can be converted into cash quickly are included in this ratio
      - Quick Ratio = (Current Assets - Inventories) / Current Liabilities
    - - Indicates how much cash and cash equivalents a company has to meet its short-term debt obligations.
      - Cash ratio = (cash + cash equivalents) / current liabilities
    - - OCF > 0: business is generating cash from its core business activities, is able to cover its own expenses and investments
      - OCF < 0: business is burning cash from its operations, which is a warning sign
      - OCF = Operating cash flow / Current liabilities
  - - - = Total debt/Total equity
      - Expresses the ralationship between shareholder's funds and loan capital
    - - = Total equity / total capital resources
    - - = Total debt / Total capital resources
  - - - represents the amount of additional profit on each unit of goods sold or services provided.
      - Net profit margin = Net profit / net sales
    - - How much profit after tax does 1 unit of assets generate?
      - = Profit after tax / Average total assets
    - - reflects how much profit after tax is earned per common share in a year
      - = Profit after tax – Dividends / Number of common shares circulated
    - - shows the level of profit after tax earned on each 1 unit of capital invested during the period.
      - = Profit after tax / Average total equity