Financial Ratio Analysis
1. Current Ratio
Current Assets
Current Ratio = ------------------------
Current Liabilities
2. Quick Ratio
Quick Assets
Quick Ratio = ----------------------
Current Liabilities
Quick Assets = Current Assets - Inventories
3. Net Working Capital Ratio
Net Working Capital
Net Working Capital Ratio = --------------------------
Total Assets
Net Working Capital = Current Assets - Current Liabilities
4. Return on Assets (ROA)
Net Income
Return on Assets (ROA) = ----------------------------------
Average Total Assets
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
5. Return on Equity (ROE)
Net Income
Return on Equity (ROE) = --------------------------------------------
Average Stockholders' Equity
Average Stockholders' Equity = (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2
6. Return on Common Equity (ROCE)
Net Income
Return on Common Equity = --------------------------------------------
Average Common Stockholders' Equity
Average Common Stockholders' Equity
= (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity) / 2
7. Profit Margin
Net Income
Profit Margin = -----------------
Sales
8. Earnings Per Share (EPS)
Net Income
Earnings Per Share = ---------------------------------------------
Number of Common Shares Outstanding
9. Assets Turnover Ratio
Sales
Assets Turnover Ratio = ----------------------------
Average Total Assets
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
9. Accounts Receivable Turnover Ratio
S ales
Accounts Receivable Turnover Ratio = -----------------------------------
Average Accounts Receivable
Average Accounts Receivable= (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
10. Inventory Turnover Ratio
Cost of Goods Sold
Inventory Turnover Ratio = ---------------------------
Average Inventories
Average Inventories = (Beginning Inventories + Ending Inventories) / 2
11. Debt to Equity Ratio
Total Liabilities
Debt to Equity Ratio = ----------------------------------
Total Stockholders' Equity
12. Interest Coverage Ratio
Income Before Interest and Income Tax Expenses
Interest Coverage Ratio = --------------------------------------- Interest Expense
Income Before Interest and Income Tax Expenses = Income Before Income Taxes + Interest Expense
13. Price Earnings (PE) Ratio
Market Price of Common Stock Per Share
Price Earnings Ratio = ---------------------------------------
Earnings Per Share
14. Market to Book Ratio
Market Price of Common Stock Per Share
Market to Book Ratio = --------------------------------------- Book Value of Equity Per Common Share
Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares
15. Dividend Yield
Annual Dividends Per Common Share
Dividend Yield = ------------------------------------------------
Market Price of Common Stock Per Share
Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares
16. Dividend Payout Ratio
Cash Dividends
Dividend Payout Ratio = --------------------
Net Income
17. ROA = Profit Margin X Assets Turnover Ratio
Net Income Net Income Sales
ROA = ------------------------ = -------------- X ------------------------
Average Total Assets Sales Average Total Assets
Profit Margin = Net Income / Sales
Assets Turnover Ratio = Sales / Averages Total Assets
Financing of Current Assets
• 1.Current Assets = Current Liabilities + NWC or
• 2. NWC = Current Assets – Current Liabilities or
• 3. Current Assets = Current Liabilities +Contribution from Long
6. Total Net Accruals = Accrual Earnings - Cash Earnings
7.End Equity = Start Equity + Accrual Earnings - Cash Dividends - Stock Repurchases + Equity Issuances
8. Accrual Earnings = Owners' Equity + Cash Dividends + Stock Repurchases - Equity Issuance= Owners' Equity + Net Cash Distributions to Equity
9. Accrual Earnings = Assets - Liabilities + Net Cash Distributions to Equity
10. Cash Earnings = Cash + Cash Dividends + Stock Repurchases - Equity Issuance = Cash + Net Cash Distributions to Equity
11. Total Net Accruals = Accrual Earnings - Cash Earnings
= [Assets - Liabilities + Net Cash Dist. to Equity] - [Cash + Net Cash Dist. to Equity]
12. Total Net Accruals = Assets-Liabilities – cash
13. Total Net Accruals = Accrual Earnings - Cash Earnings
14. Accrual Earnings = Net Income
15. Cash Earnings = Cash + Cash Dividends + Stock Repurchases - Equity Issuance
16. Total Net Accruals = Accrual Earnings - Cash Earnings = Net Income - Cash - Cash Dividends - Stock Repurchases + Equity Issuance
17. Total Net Accruals = Assets- Liabilities – cash
18. Total Net Accruals = Net Income - Cash - Cash Dividends - Stock Repurchases + Equity Issuance
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