Professional Documents
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FINANCIAL RATIOS
Liquidity Ratios
Shows short term solvency or liquidity position of the co.
High
: + High solvency (-) Longer conversion cycle , High Carrying cost, Longer Payback period , High Opp. Cost
High : + High short term solvency (-) high idle (unutilized) cash balance
low :
High : + low carrying Cost (-) fatal in case of Inventory shortage mkt. may be captured not able to acchieve Economies of scale
High : + Lower avg. payback period, less opp. cost. (-) Fatal in a buyers market
Avg. Creditors
High : + Lower avg. payback period to creditors, high opp. cost. Builds goodwill, helps in sellers mkt.
Tells the number of days till which we can carry operations out of our quick assets if cash flow stops.
also management.
DEBT/EQUITY RATIO = Long Term Debt Shareholders Equity or Total Debt Shareholders Equity
EBIT Interest
EAT
PREF. DIV.
Total Coverage =
EBIT
PROFITABILITY RATIOS
Gross Profit Margin (%) : Gross Profit * 100
Operating Ratio(%) :
(COGS + Other oper. Exp.) * 100 Sales Lower represents Economies of scale
COGS Ratio(%) :
Sales
or
NPAT * 100
Avg. Total Assets
R.O.E. (%)
Return on Sh. Holders Equity :
NPAT * 100
Avg. Total Sh.holders equity
EFE or (NPAT Pref Div) Wt. Avg. No of Equity Shares *diluted EPS
Dividend Per share:
or
EPS
ACTIVITY RATIO
Total Asset Turnover Ratio :