Session 3
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Summary of Key Financial Ratios Profitability ratios Liquidity ratios Leverage ratios Activity ratios
Profitability ratios: 1. Gross profit margin 2. Operating profit margin 3. Net profit margin (or return on sales) 4. Return on total assets 5. Return on stockholders’ equity (or return on net worth) 6. Return on common equity 7. Earnings per share
Liquidity ratios: 1.
Current ratio
2. Quick ratio (or acid-test ratio) 3. Cash ratio 4. Inventory to net working capital
Leverage ratios 1. Debt to assets ratio 2. Debt to equity ratio 3. Long-term debt to equity ratio 4. Times-interest-earned (or coverage ratios) 5. Fixed-charge coverage
Activity ratios: 1. Inventory turnover 2. Fixed-assets turnover 3. Total-assets turnover 4. Account receivable turnover 5. Average collection period
• SERVQUAL • Segmental Analysis • PIMS
Profitability ratios: 1. Gross profit margin 2. Operating profit margin 3. Net profit margin (or return on sales) 4. Return on total assets 5. Return on stockholders’ equity (or return on net worth) 6. Return on common equity 7. Earnings per share
Liquidity ratios: 1.
Current ratio
2. Quick ratio (or acid-test ratio) 3. Cash ratio 4. Inventory to net working capital
Leverage ratios 1. Debt to assets ratio 2. Debt to equity ratio 3. Long-term debt to equity ratio 4. Times-interest-earned (or coverage ratios) 5. Fixed-charge coverage
Activity ratios: 1. Inventory turnover 2. Fixed-assets turnover 3. Total-assets turnover 4. Account receivable turnover 5. Average collection period
• SERVQUAL • Segmental Analysis • PIMS
