Financial

Ratios
in 1 PDF

Mohamed Samir Rashed

CMA , IFRDIP

May 2023
 The Content

Profitability Ratios

Liquidity Ratios

Efficiency Ratios

Debt Ratios

Market Value Ratios

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Profitability Ratios

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 Gross Profit Margin

Defination
Measures the percentage of
revenue retained after
deducting direct production
costs.

Formula
(Gross Profit / Revenue) * 100%

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 Net Profit Margin

Defination
Evaluates the percentage of
revenue remaining after
deducting all expenses,
including taxes and interest.

Formula
(Net Income / Revenue) * 100%

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 Return on Assets
(ROA)

Defination
Indicates the company's
profitability relative to its
total assets.

Formula
(Net Income / Total Assets) * 100%

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 Return on Equity
(ROE)

Defination
Measures the return earned on
shareholders' equity
investment.

Formula
(Net Income /
Shareholders' Equity) * 100%

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 Earnings per Share
(EPS)

Defination
Shows the portion of earnings
attributable to each
outstanding share.

Formula
(Net Income - Preferred Dividends)
/ Weighted Average Common Shares

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 Liquidity Ratios

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 Current Ratio

Defination
Assesses a company's ability to
meet short-term obligations
using its current assets.

Formula
Current Assets / Current Liabilities

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 Quick Ratio

Defination
Measures the company's
ability to pay short-term
liabilities without relying on
the sale of inventory.

Formula
(Current Assets - Inventory) /
Current Liabilities

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 Cash Ratio

Defination
Indicates the company's ability
to cover immediate liabilities
with its available cash.

Formula
Cash and Cash Equivalents /
Current Liabilities

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 Working
Capital Ratio

Defination
Evaluates the adequacy of a
company's working capital to
support its operations.

Formula
Current Assets / Current Liabilities

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 Operating Cash
Flow Ratio

Defination
Measures the company's
ability to generate cash from
its core operations to meet
short-term obligations.

Formula
Operating Cash Flow / Current
Liabilities

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Efficiency Ratios

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 Inventory
Turnover

Defination
Evaluates the number of times
inventory is sold and replaced
within a specific period.

Formula
Cost of Goods Sold / Average
Inventory

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 Accounts Receivable
Turnover

Defination
Measures the efficiency of
collecting accounts receivable
from customers.

Formula
Net Credit Sales / Average Accounts
Receivable

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 Asset Turnover

Defination
Indicates how efficiently a
company utilizes its assets to
generate revenue.

Formula
Revenue / Average Total Assets

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 Fixed Asset
Turnover

Defination
Measures the efficiency of a
company's fixed assets in
generating revenue.

Formula
Revenue / Average Fixed Assets

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 Payable Turnover

Defination
Evaluates the efficiency of
paying off suppliers and trade
payables.

Formula
Purchases / Average Accounts
Payable

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 Debt Ratios

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 Debt-to-Equity
Ratio

Defination
Indicates the proportion of a
company's financing that
comes from debt relative to
equity.

Formula
Total Debt / Shareholders' Equity

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 Debt Ratio

Defination
Measures the percentage of a
company's assets financed by
debt.

Formula
Total Debt / Total Assets

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 Interest Coverage
Ratio

Defination
Measures the company's
ability to cover interest
expenses with its earnings.

Formula
EBIT / Interest Expense

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 Debt Service
Coverage Ratio

Defination
Evaluates a company's ability
to meet its debt obligations
from its operating income.

Formula
Operating Income / Debt Payments

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 Equity Ratio

Defination
Indicates the proportion of a
company's assets financed by
shareholders' equity.

Formula
Shareholders' Equity / Total Assets

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Market Value Ratios

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 Price-to-Earnings
Ratio (P/E Ratio)

Defination
Compares the company's stock
price to its earnings,
indicating investor sentiment.

Formula
Market Price per Share / Earnings
per Share (EPS)

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 Price-to-Sales Ratio
(P/S Ratio)

Defination
Evaluates the company's stock
price relative to its revenue
generated per share.

Formula
Market Price per Share / Revenue
per Share

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 Dividend Yield

Defination
Measures the return on
investment through dividends
relative to the stock price.

Formula
Dividend per Share / Market Price
per Share

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 Price-to-Book Ratio
(P/B Ratio)

Defination
Compares the market value of
a company's shares to its book
value, reflecting investor
perception.

Formula
Market Price per Share / Book Value
per Share

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 Market
Capitalization

Defination
Represents the total market
value of a company's
outstanding shares.

Formula
Market Price per Share * Total
Outstanding Shares

Mohamed Samir Rashed

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