book value per share Total stockholders' equity / Number of common shares outstanding
Cash Coverage Ratio (EBIT + Depreciation and Amortization) / Interest
Cash Ratio cash + marketable securities / current liabilities
1. Liquidity ratios- short term solvency
2. Leverage ratios- long term solvency
Categories of Financial Statement
3. Turnover ratios- asset utilization
Ratios (5)
4. Profitability ratios- financial performance
5. Market value ratios- value assessed by investors
A standardized financial statement presenting all items in percentage ter
Balance sheet items are shown as a percentage of assets and income
statement items as a percentage of sales.
Common-Size Statements
Makes it easier to compare financial info as a firm grows and across differ
companies
Current Ratio current assets / current liabilities
Days' Sales in Inventory 365/inventory turnover
Days' Sales in Receivables 365/receivables turnover
Debt to Equity Ratio Total Debt/Total Equity
, Du Pont formula ROE = Profit Margin x Total Asset Turnover (R/A) x Equity Multiplier (A/SE
Equity Multiplier Total Assets/Total Equity
relationships between financial statement amounts (used by investors and
creditors to help them decide if they should invest/loan $ to a company)
comparison points
Financial Statement Ratios
1. competing companies
2. industry averages
3. past years (trend analysis)
Gross Profit Margin Gross Profit/Sales
Inventory Turnover cost of goods sold/inventory
measure the degree to which a firm relies on borrowed funds in its opera
1. Total debt ratio
2. Debt/Equity
leverage (debt) ratios (5)
3. Equity multiplier
4. Times interest earned
5. Cash coverage
Cash Coverage Ratio (EBIT + Depreciation and Amortization) / Interest
Cash Ratio cash + marketable securities / current liabilities
1. Liquidity ratios- short term solvency
2. Leverage ratios- long term solvency
Categories of Financial Statement
3. Turnover ratios- asset utilization
Ratios (5)
4. Profitability ratios- financial performance
5. Market value ratios- value assessed by investors
A standardized financial statement presenting all items in percentage ter
Balance sheet items are shown as a percentage of assets and income
statement items as a percentage of sales.
Common-Size Statements
Makes it easier to compare financial info as a firm grows and across differ
companies
Current Ratio current assets / current liabilities
Days' Sales in Inventory 365/inventory turnover
Days' Sales in Receivables 365/receivables turnover
Debt to Equity Ratio Total Debt/Total Equity
, Du Pont formula ROE = Profit Margin x Total Asset Turnover (R/A) x Equity Multiplier (A/SE
Equity Multiplier Total Assets/Total Equity
relationships between financial statement amounts (used by investors and
creditors to help them decide if they should invest/loan $ to a company)
comparison points
Financial Statement Ratios
1. competing companies
2. industry averages
3. past years (trend analysis)
Gross Profit Margin Gross Profit/Sales
Inventory Turnover cost of goods sold/inventory
measure the degree to which a firm relies on borrowed funds in its opera
1. Total debt ratio
2. Debt/Equity
leverage (debt) ratios (5)
3. Equity multiplier
4. Times interest earned
5. Cash coverage
