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PROFITABILITY RATIOS Current assets 𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 𝑒𝑥𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑑𝑒𝑝′ 𝑛& 𝑎𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛

Return on sales 𝑃𝑟𝑜𝑓𝑖𝑡 turnover 𝐴𝑣𝑒. 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠


𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 Net working
Current assets – Current liabilities
capital
Gross profit rate 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 Current ratio 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Quick assets ratio 𝑄𝑢𝑖𝑐𝑘 𝑎𝑠𝑠𝑒𝑡𝑠
Return on total 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
assets 𝑃𝑟𝑜𝑓𝑖𝑡 ÷ 𝐼𝑛𝑡. 𝑒𝑥𝑝𝑒𝑛𝑠𝑒, 𝑛𝑒𝑡 𝑜𝑓 𝑡𝑎𝑥 Defensive 𝐷𝑒𝑓𝑒𝑛𝑠𝑖𝑣𝑒 𝑎𝑠𝑠𝑒𝑡𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 interval ratio 𝐴𝑣𝑒. 𝑑𝑎𝑖𝑙𝑦 𝑒𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒𝑠
Earnings per (𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠)
Return on 𝑃𝑟𝑜𝑓𝑖𝑡 share 𝐴𝑣𝑒. 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
shareholders’ equity 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦
Return on ordinary 𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠
shareholders’ equity 𝐴𝑣𝑒. 𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑆𝐻𝐸 LEVERAGE RATIOS (Solvency/Stability Ratios)
Operating leverage 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 Debt to equity ratio 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝐸𝐵𝐼𝑇 𝑁𝑒𝑡 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦
Times preferred 𝑃𝑟𝑜𝑓𝑖𝑡 Debt-to-assets ratio 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
dividend earned 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡𝑠 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Equity-to-assets 𝑁𝑒𝑡 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦
ratio (equity ratio) 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
LIQUIDITY RATIOS Equity multiplier 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Operating turnover Collection period + Inventory 𝑁𝑒𝑡 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦
days Times interest 𝐸𝐵𝐼𝑇
Inventory turnover 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 earned 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
𝐴𝑣𝑒. 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 Financial leverage EBIT ÷ (EBIT – Interest expense –
Inventory days 365 Preference dividend before tax)
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 Total leverage Degree of operating leverage
Receivable turnover 𝑁𝑒𝑡 𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 Χ
Degree of financial leverage
𝐴𝑣𝑒. 𝑡𝑟𝑎𝑑𝑒 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤𝑠 𝑏𝑒𝑓𝑜𝑟𝑒 𝑓𝑖𝑥𝑒𝑑 𝑐ℎ𝑎𝑟𝑔𝑒𝑠
Collection period 365 Fixed charges rate
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑇𝑜𝑡𝑎𝑙 𝑓𝑖𝑥𝑒𝑑 𝑐ℎ𝑎𝑟𝑔𝑒𝑠
Payable turnover 𝑁𝑒𝑡 𝑐𝑟𝑒𝑑𝑖𝑡 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 Total assets-to-total 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
𝐴𝑣𝑒. 𝑡𝑟𝑎𝑑𝑒 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠 liabilities ratio 𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Payable days 365 Non-current assets 𝑁𝑜𝑛 − 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
to long-term
𝑃𝑎𝑦𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 liabilities ratio 𝐿𝑜𝑛𝑔 − 𝑡𝑒𝑟𝑚 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Materials turnover 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑢𝑠𝑒𝑑
𝐴𝑣𝑒. 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
Work-in-process 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑒𝑑 GROWTH RATIOS
turnover 𝐴𝑣𝑒. 𝑤𝑜𝑟𝑘 𝑖𝑛 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 Price-earnings ratio 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
Finished goods 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
inventory 𝐴𝑣𝑒. 𝑓𝑖𝑛𝑖𝑠ℎ𝑒𝑑 𝑔𝑜𝑜𝑑𝑠 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 Dividend yield ratio 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
Cash turnover 𝐶𝑎𝑠ℎ 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
𝐴𝑣𝑒. 𝑐𝑎𝑠ℎ 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 Dividend payout ratio 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
Days to pay operating 365
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
expenses 𝐶𝑎𝑠ℎ 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 Book value per share 𝑆𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦
Working capital 𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
turnover 𝐴𝑣𝑒. 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
𝐴𝑣𝑒. 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑐𝑎𝑝𝑖𝑡𝑎𝑙
Assets turnover 𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝐴𝑣𝑒. 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
CASH FLOW RATIOS
Cash flow adequacy Cash from operations /
(Long-term debt paid +
Purchases of assets)
Long-term debt payment Long-term debt payments /
Cash from operations
Dividend payout on cash Dividends / Cash from
from operations operations
Reinvestment Purchase of assets / Cash
from operations
Total debt coverage Total liabilities / Cash from
operations
Depreciation-amortization Depreciation +
impact Amortization / Cash from
operations
Cash flow to sales Cash from operations /
Sales
Cash flow to net income Cash from operation /
Income from ordinary
operations
Cash flow return on sale Cash from operations /
Total assets
Current cash to debt Cash flows from operations
coverage / Total debt
Cash flows from operations Cash flows from operation /
to current liabilities Current liabities