Financial Ratio Formula Criteria Source

Gross Profit Margin Gross Profit Bonus: >40%

÷ Sales Revenue
Net Profit Margin PATMI (Profit After Tax & Minority Interest) Bonus: >10%
÷ Sales Revenue
Operating Margin EBIT (Earning Before Interest & Tax) Bonus: >15%
÷ Sales Revenue
Market Cap(italization) Share Price Mega Cap: >US$200B
x Large Cap: US$10B-US$200B
Total Shares Outstanding Mid-Cap: US$1B-US$10B
Small Cap: US$300M-US$1B
Micro Cap: US$50M-US$300M
Nano Cap: <US$50M
EPS Net Profit after Tax Direct relationship to stock price.
(Earning Per Share) ÷ Total Shares Outstanding Income Statement
PE Ratio Current Share Price <10: Under-priced
(Price-to-Earning Ratio) ÷ EPS 10-20: Fairly-priced
>20: Over-priced
Dividend Yield (%) Gross Dividend Per Share x 100% Compare to other cash generating
÷ Share Price investments (e.g. FD & bonds).
PB Share Price <0.5: Company losing money
(Price-to-Book Ratio) ÷ Book Value Per Share

Where Book Value Per Share =

(Total Asset - Intangible Assets – Total
Liabilities)
÷
No. of Shares
Current Ratio Current Assets Bonus: >1
÷ Current Liabilities
Debt-to-Equity Ratio Total Liabilities Bonus: <1
Balance Sheet
÷ Total Equity
Working Capital Inventory Increase at a slower rate than
+ Account Receivables Sales Revenue.
– Accounts Payable
 Financial Ratio Formula Criteria Source
Cash Conversion Working Capital x 365 Decreasing or constant.
÷ Sales Revenue
ROE Net Profit after Tax Bonus: >15% 1. Balance Sheet
(Return on Equity) ÷ Total Equity 2. Income Statement
ROIC (%) EBIT (1-Tax Rate) x 100% Bonus: >15%
(Return on Invested Capital) ÷ (Equity + Total Debt – Cash & Equivalents)
Net Cash from Operation - Increasing consistently.
Free Cash Flow Net Cash from Operation Must be positive. Cash Flow Statement
- CAPEX