Ratio Analysis - Easy To Remember

Ratios-Tools for financial analysis Types of Ratios

Activity Liquidity

Solvency

Profitability

Valuation/Investment

Activity Ratios Ratio

Numerator

Denominator

Inventory turnover

COGS

Average Inventory

Days of Inventory on hand (DOH) Receivables turnover

Number of days in a period

Inventory turnover

Revenues

Average Receivables

Days of Sales Outstanding(DSO) Payables Turnover

Number of days in a period

Receivables turnover

Revenues

Average Payables

Days of payables outstanding(DPO)

Number of days in a period

Payables Turnover

Working Capital turnover

Revenues

Average working capital

Fixed Asset turnover

Revenues

Average fixed assets

Total asset turnover

Revenues

Average Total assets

Liquidity Ratios Ratio

Numerator

Denominator

Current Ratio

Current Assets

Current Liabilities

Quick Ratio

Cash+ Short term Marketable securities+ Receivables

Current Liabilities

Cash Ratio

Cash+ Short Term Marketable Securities

Current Liabilities

Cash Conversion Cycle

DOH+DSO-DPO

Solvency Ratios Ratio

Numerator

Denominator

Debt-to-assets

Total debts

Total assets

Capitalization Ratio

Total debt

Total Debt+ Total Equity

Debt-to-equity or capital gearing ratio

Total debt

Total Equity

Financial Leverage Ratio

Average Total assets

Average Total Equity

Interest Coverage

EBIT

Interest expense

Ratio

Numerator

Denominator

Gross Profit Margin

Gross Profit

Revenues

Operating Profit Margin

O/P Profit

Revenues

Pre-tax Profit Margin

PBT

Revenues

Net Profit Margin

PAT

Revenues

ROA

Net Income

Average Total assets

*ROE

Net Income

Average Total Equity

Profitability Ratios

Investment/Valuation Ratios Ratio

Numerator

Denominator

EPS

Net income-Preferred Dividends

Weighted average number of shares outstanding

P/E

Price per share

EPS

Cash Flow per share

CFO

Average number of shares outstanding

Dividend Payout Ratio

Dividend per share

EPS

Dividend Retention Ratio (r)

1-Dividend Payout Ratio

Sustainable growth rate(g)

r * ROE

*DuPont Analysis-Decomposition of ROE ROE= Net Income/Average Total Equity = (Net Income/Average Total assets) *(Average Total assets/Average Total Equity) = ROA * Leverage Or ROE= Net Income/ Average Total Equity = (Net Income/Revenue)*(Revenue/Average Total assets)*(Average Total assets/Average Total Equity) = Net Profit Margin *Asset turnover *Leverage