Rati How Calculated ‘What It Measures Liquidity Ratios Curent Ratio Curent assets ‘The extent to which a firm can meet its Curentliabttes short-term obligations Quick Ratio Cumentassetsminusinventory ‘The extent 10 which a firm can meet Leverage Ratios (Curent liabilities its short-term obligations without ‘relying upon the sale ofits inventories Debi-to-Total-Asvets Ratio Debi-o-Equity Ratio Long-Term Debtto-Equity Ratio ‘Times Interest Earned Ratio Profitsbefore interest and taxes ‘The percentage of total funds that are provided by ereditors ‘The percentage of otal funds provided bby creditors versus by owners ‘The balance between debt and equity in a firm's long-term capital structure ‘The extent to which earnings can "Totalinteest charges decline without the frm becoming ‘unable t0 meet its annnal interest costs Activity Ratios Inventory Turnover Sales ‘Whether a firm holds excessive Inventory of finished goods stocks of inventories and whether 2 firm is slowly selling its inventories compared to the industry average Fixed Assets Turnover Sales Sales productivity and plant and Fined assets equipment utilization ‘Total Assets Turnover les ‘Whether a firm is generating a suficent Totalasses ‘volume of business forthe size of is asset investment Accounts Receivable Turmover Annaler sales ‘The average length of time it takes a “Accounts receivable firm to collet credit sales (in percentage terms) ‘Average Collection Period Accounts receivable The average length of time it takes a “Total credit sales/365 days firm to collet on credit sales (in days) o ‘nitro™, professionalProfitability Ratios Gross Profit Margin | ‘Sales minus cost of goods sold “The total margin available to cover Sales operating expenses and yield a profit Operating Profit Margin Eamings before interest and taxes(EBIT) Profitability without concer fo taxes Sales and interest Net Profit Margin Netincome Altertax profits per dolar of sales Sales Return on Total Assets (ROA) ‘Netincome Altertax profits per dollar of asets; Totalascets this rato is also called return on invest sent (ROD) Return on Stockholders” Equity (ROE) Netincome Alter tax profits per dolar of stook- Teal sockholdes’ equity holders’ investment inthe firm Eamings Per Share (EPS) Net income Eamings available to the owners Number of shares of common stock oustanding of common stock Price-Earnings Ratio ‘Market price per share Attractiveness of firm on equity Eamings per share markets Growth Ratios Sales “Annual percentage growth in total sales Fin’ growth rate in sles Net Income Annual percentage growth in profits Firm’s growth rate in profits Eamings Per Share ‘Annual percentage growth in EPS Firm’s growth rate in EPS Dividends Per Share ‘Annual percentage growth in dividends per share Fis growth ate in dividends per share @ nitro” professional