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RETIO ANALYSIS

SOURCE: http://en.wikipedia.org/wiki/Financial_ratio
Profitability ratios
Profitability ratios measure the company's use of its assets and control of its expenses
to generate an acceptable rate of return
Gross margin, Gross profit margin or Gross Profit Rate[7][8]

:::OR :::
Operating margin, Operating Income Margin, Operating profit
margin or Return on sales (ROS)[8][9]

Note: Operating income is the difference between operating revenues and operating
expenses, but it is also sometimes used as a synonym for EBIT and operating profit.
[10]
This is true if the firm has no non-operating income. (Earnings before interest and
taxes / Sales[11][12])
Profit margin, net margin or net profit margin[13]

Return on equity (ROE)[13]

Return on assets (ROA ratio or Du Pont Ratio)[6]

Return on assets (ROA)[14]

Return on assets Du Pont (ROA Du Pont)[15]

Return on Equity Du Pont (ROE Du Pont)

Return on net assets (RONA)

Return on capital (ROC)

Risk adjusted return on capital (RAROC)

:::OR :::
Return on capital employed (ROCE)

Note: this is somewhat similar to (ROI), which calculates Net Income per Owner's
Equity
Cash flow return on investment (CFROI)

Efficiency ratio

Net gearing

Basic Earnings Power Ratio[16]

Liquidity ratios[edit]
Liquidity ratios measure the availability of cash to pay debt.
Current ratio (Working Capital Ratio)[17]

Acid-test ratio (Quick ratio)[17]

Cash ratio[17]

Operating cash flow ratio

Activity ratios (Efficiency Ratios)[edit]


Activity ratios measure the effectiveness of the firm's use of resources.
Average collection period[3]

Degree of Operating Leverage (DOL)

DSO Ratio.[18]

Average payment period[3]

Asset turnover[19]

Stock turnover ratio[20][21]

Receivables Turnover Ratio[22]

Inventory conversion ratio[4]

Inventory conversion period (essentially same thing as above)

Receivables conversion period

Payables conversion period

Cash Conversion Cycle

Debt ratios (leveraging ratios)[edit]


Debt ratios quantify the firm's ability to repay long-term debt. Debt ratios
measure financial leverage.
4

Debt ratio[23]

Debt to equity ratio[24]

Long-term Debt to equity (LT Debt to Equity)[24]

Times interest earned ratio (Interest Coverage Ratio)[24]

OR

Debt service coverage ratio

Market ratios[edit]
Market ratios measure investor response to owning a company's stock and also the
cost of issuing stock. These are concerned with the return on investment for
shareholders, and with the relationship between return and the value of an investment
in companys shares.
Earnings per share (EPS)[25]

Payout ratio[25][26]

OR

Dividend cover (the inverse of Payout Ratio)

P/E ratio

Dividend yield

Cash flow ratio or Price/cash flow ratio[27]

Price to book value ratio (P/B or PBV)[27]

Price/sales ratio

PEG ratio

Other Market Ratios


EV/EBITDA

EV/Sales

Cost/Income ratio
Sector-specific ratios
EV/capacity
EV/output
REFERENCES:
1.

Groppelli, Angelico A.; Ehsan Nikbakht (2000). Finance, 4th ed. Barron's Educational Series, Inc. p. 433. ISBN 0-

2.

Jump up^ Groppelli, p. 434.

3.

^ Jump up to:a b c Groppelli, p. 436.

4.

^ Jump up to:a b Groppelli, p. 439.

5.

Jump up^ Groppelli, p. 442.

6.

^ Jump up to:a b Groppelli, p. 445.

7.

Jump up^ Williams, P. 265.

8.

^ Jump up to:a b Williams, p. 1094.

9.

Jump up^ Williams, Jan R.; Susan F. Haka; Mark S. Bettner; Joseph V. Carcello (2008).Financial & Managerial

7641-1275-9.

Accounting. McGraw-Hill Irwin. p. 266. ISBN 978-0-07-299650-0.


10. Jump up^ Operating income definition
11. Jump up^ Groppelli, p. 443.
12. Jump up^ Bodie, Zane; Alex Kane and Alan J. Marcus (2004). Essentials of Investments, 5th ed. McGraw-Hill
Irwin. p. 459. ISBN 0-07-251077-3.
13. ^ Jump up to:a b Groppelli, p. 444.
14. Jump up^ Professor Cram. "Ratios of Profitability: Return on Assets" College-Cram.com. 14 May 2008
15. Jump up^ Professor Cram. "Ratios of Profitability: Return on Assets Du Pont", College-Cram.com. 14 May 2008
16.

Weston, J. (1990). Essentials of Managerial Finance. Hinsdale: Dryden Press. p. 295. ISBN 0-03-030733-3.

17.

^ Jump up to:a b c Groppelli, p. 435.

18.

Jump up^ Houston, Joel F.; Brigham, Eugene F. (2009). Fundamentals of Financial Management. [Cincinnati,
Ohio]: South-Western College Pub. p. 90. ISBN 0-324-59771-1.

19.

Jump up^ Bodie, p. 459.

20.

Jump up^ Groppelli, p. 438.

21.

Jump up^ Weygandt, J. J., Kieso, D. E., & Kell, W. G. (1996). Accounting Principles (4th ed.). New York,
Chichester, Brisbane, Toronto, Singapore: John Wiley & Sons, Inc. p. 801-802.

22.

Jump up^ Weygandt, J. J., Kieso, D. E., & Kell, W. G. (1996). Accounting Principles (4th ed.). New York,
Chichester, Brisbane, Toronto, Singapore: John Wiley & Sons, Inc. p. 800.

23.

Jump up^ Groppelli, p. 440; Williams, p. 640.

24.

^ Jump up to:a b c Groppelli, p. 441.

25.

^ Jump up to:a b Groppelli, p. 446.

26.

Jump up^ Groppelli, p. 449.

27.

^ Jump up to:a b Groppelli, p. 447