Equity analysis

1 Profitability ratios
2 Du-Pont analysis
3 Valuation ratios where,
4 Sustainable Growth rate g = b x r b = Retention ratio
r = Return on Equity
1 Turnover ratios
1 Receivables TO
2 Inventory TO
3 Payables TO
4 Total Assets TO
5 Fixed Assets TO
6 Working Capital TO

2 Liquidity ratios
1 Current ratio
2 Quick ratio
3 Cash ratio
4 Defensive Interval Measure

3 Solvency ratios
1 Structural
1 Debt Equity ratio
2 Debt to Capital ratio
3 Debt to Tot. asset
4 Asset to Equity (Fin lev) (Eq multiplier)
2 Coverage
1 Interest Coverage ratio
2 Fixed Charge Coverage ratio

4 Profitability ratios
1 Margin Type
1 GP Margin
2 Operating Profit Margin
3 NP Margin
2 Return Type
1 Return on Asset
2 Return on Capital Employed
3 Return on Equity
4 Return on Common Equity

5 Valuation ratios
1 PE ratio
2 PS ratio
3 Price to Cash flow ratio

6 Du-Pont analysis of ROE

1 Receivables TO Sales
Avg. Receivables

2 Inventory TO COGS
Avg. Inventory

3 Payables TO Purchases
Avg. Payables

4 Total Assets TO Sales

Tot. Assets

5 Fixed Assets TO Sales

Fixed Assets

6 Working Capital TO Sales

Avg. Working Capital
1 Current ratio Current Assets
Current Liabilities

2 Quick ratio Cash + Marketable securities + A/c receivables

Current Liabilities

3 Cash ratio Cash + Marketable securities

Current Liabilities

4 Defensive Interval Measure Cash + Marketable securities

Daily Cash Expenditure
1 Structural
1 Debt Equity ratio Debt
Equity

2 Debt to Capital ratio Debt

Debt + Equity

3 Debt to Tot. asset Debt

Tot. Asset

4 Asset to Equity (Fin lev) (Eq multiplier) Tot. Asset

Equity

2 Coverage
1 Interest Coverage ratio EBIT
Interest

2 Fixed Charge Coverage ratio EBIT + Lease payment

(Lease payments = fixed charge before tax) Interest + Lease Payment
1 Margin Type (% of sales)
1 GP Margin Gross Profit
Sales

2 Operating Profit Margin EBIT

Sales

3 NP Margin Net Profit

Sales

2 Return Type
1 Return on Asset PAT + Interest*(1-t)
Avg. Asset

2 Return on Capital Employed EBIT

Debt + Equity

3 Return on Equity PAT

(Du-Pont analysis) Equity

4 Return on Common Equity PAT - Pref. Div.

Common Equity
1 PE ratio Market Price per share
Earnings per share

2 PS ratio Market Price per share

Sales per share

3 Price to Cash flow ratio Market Price per share

Free Cash Flow for Equity
Du-Pont analysis

Return on equity PAT

Equity

PAT x Sales x
Sales x Avg. Assets x

NP Margin Asset TO

PAT x PBT x
PBT x EBIT x

Tax Burden Interest burden

 Avg. Assets
Equity

Equity multiplier

EBIT x Sales x Avg. Assets

Sales x Avg. Assets x Equity

Operating profit margin Asset TO Equity multiplier