AUGUST 2, 2022
FUNDAMENTAL ANALYSIS: RATIOS
CHAPTER TWO
IZEL BARNARD
, Fundamental Analysis: Ratios
Table of Contents
1. Profitability ............................................................................................................................. 2
1.1. Return on Total Assets .................................................................................................... 2
1.2. Return on Equity.............................................................................................................. 2
1.3. Cost of Debt (return on debt capital) .............................................................................. 2
1.4. Return on Financial Assets .............................................................................................. 2
2. Profit Margins ......................................................................................................................... 2
2.1. Gross Profit Margin ......................................................................................................... 2
2.2. Operating Profit Margin .................................................................................................. 3
2.3. EBIT-margin ..................................................................................................................... 3
2.4. Net Profit Margin............................................................................................................. 3
3. Liquidity .................................................................................................................................. 3
3.1. Current Ratio ................................................................................................................... 3
3.2. Acid Test Ratio ................................................................................................................. 3
4. Turnover Ratios and Times ..................................................................................................... 4
4.1. Turnover Ratio and Time of Current Assets .................................................................... 4
4.2. Turnover Ratio and Time of PPE ...................................................................................... 4
4.3. Turnover Ratio and Time of Trade Receivables ............................................................... 4
4.4. Turnover Ratio and Time of Inventory ............................................................................ 4
5. Solvency.................................................................................................................................. 5
5.1. Debt-to-assets Ratio (Debt Ratio) .................................................................................... 5
6. Coverage Ratios ...................................................................................................................... 5
6.1. Finance Cost Coverage .................................................................................................... 5
6.2. Ordinary Dividend Coverage............................................................................................ 5
7. Investment Ratios ................................................................................................................... 5
7.1. Earnings Per Share........................................................................................................... 5
7.2. Earnings Yield .................................................................................................................. 5
7.3. Dividend Per Share .......................................................................................................... 6
7.4. Dividend Yield .................................................................................................................. 6
7.5. Price-earnings Ratio......................................................................................................... 6
7.6. Book Value Per Share ...................................................................................................... 6
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FUNDAMENTAL ANALYSIS: RATIOS
CHAPTER TWO
IZEL BARNARD
, Fundamental Analysis: Ratios
Table of Contents
1. Profitability ............................................................................................................................. 2
1.1. Return on Total Assets .................................................................................................... 2
1.2. Return on Equity.............................................................................................................. 2
1.3. Cost of Debt (return on debt capital) .............................................................................. 2
1.4. Return on Financial Assets .............................................................................................. 2
2. Profit Margins ......................................................................................................................... 2
2.1. Gross Profit Margin ......................................................................................................... 2
2.2. Operating Profit Margin .................................................................................................. 3
2.3. EBIT-margin ..................................................................................................................... 3
2.4. Net Profit Margin............................................................................................................. 3
3. Liquidity .................................................................................................................................. 3
3.1. Current Ratio ................................................................................................................... 3
3.2. Acid Test Ratio ................................................................................................................. 3
4. Turnover Ratios and Times ..................................................................................................... 4
4.1. Turnover Ratio and Time of Current Assets .................................................................... 4
4.2. Turnover Ratio and Time of PPE ...................................................................................... 4
4.3. Turnover Ratio and Time of Trade Receivables ............................................................... 4
4.4. Turnover Ratio and Time of Inventory ............................................................................ 4
5. Solvency.................................................................................................................................. 5
5.1. Debt-to-assets Ratio (Debt Ratio) .................................................................................... 5
6. Coverage Ratios ...................................................................................................................... 5
6.1. Finance Cost Coverage .................................................................................................... 5
6.2. Ordinary Dividend Coverage............................................................................................ 5
7. Investment Ratios ................................................................................................................... 5
7.1. Earnings Per Share........................................................................................................... 5
7.2. Earnings Yield .................................................................................................................. 5
7.3. Dividend Per Share .......................................................................................................... 6
7.4. Dividend Yield .................................................................................................................. 6
7.5. Price-earnings Ratio......................................................................................................... 6
7.6. Book Value Per Share ...................................................................................................... 6
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