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  • FM - Financial Ration Analysis

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    Cygresy Gomez
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    This document discusses different types of financial ratios used to analyze a company's financial performance and health. It provides formulas and examples of liquidity ratios like the current ratio and acid test ratio, which measure a company's ability to meet short-term obligations. Solvency ratios like the debt ratio and debt equity ratio measure financial leverage and ownership. Efficiency ratios assess asset usage and inventory turnover. Finally, profitability ratios examine margins and returns on assets and equity. Interpretations of ratio results from 2020 and 2019 are also included.

    Original Description:

    fomulas

    Original Title

    FM- FINANCIAL RATION ANALYSIS

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    This document discusses different types of financial ratios used to analyze a company's financial performance and health. It provides formulas and examples of liquidity ratios like the current ratio and acid test ratio, which measure a company's ability to meet short-term obligations. Solvency ratios like the debt ratio and debt equity ratio measure financial leverage and ownership. Efficiency ratios assess asset usage and inventory turnover. Finally, profitability ratios examine margins and returns on assets and equity. Interpretations of ratio results from 2020 and 2019 are also included.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    12 views2 pages

    FM - Financial Ration Analysis

    Uploaded by

    Cygresy Gomez
    This document discusses different types of financial ratios used to analyze a company's financial performance and health. It provides formulas and examples of liquidity ratios like the current ratio and acid test ratio, which measure a company's ability to meet short-term obligations. Solvency ratios like the debt ratio and debt equity ratio measure financial leverage and ownership. Efficiency ratios assess asset usage and inventory turnover. Finally, profitability ratios examine margins and returns on assets and equity. Interpretations of ratio results from 2020 and 2019 are also included.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    A.

    Liquidity Ratios - it determine whether an entity can be able to pay for current liabilities as they become
    due with the use of current assets.

    FORMULA COMPUTATION

    2020 2019

    Current Assets
    Current Ratio=
    Current Liabilities

    Interpretation:
    2020 2019

    Quick Assets
    Acid Test Ratio=
    Current Liabilities

    Interpretation:

    2020 2019

    Total Casℎ
    Cash Ratio=
    Current Liabilities

    Interpretation:

    B. Solvency Ratios- it determine whether an entity has more ownership rather than debts. It is also called
    leverage ratios. These ratios involve comparisons of debt, asset, equity, and interest.

    FORMULA COMPUTATION

    2020 2019 C.
    E

    Current Liabilities
    Debt Ratio=
    Current Assets
    Interpretation:

    2020 2019

    Total Liabilities
    Debt Equity Ratio=
    Sℎareℎolders ' Equity
    Interpretation:

    2020 2019

    Earnings Before Interest ∧Taxes


    TIER=
    Interest Expense
    Interpretation:

    TIER- Time Interest Earned Ratio

    fficiency Ratios- measure how well does an entity utilizes their assets and resources to generate income.
    FORMULA COMPUTATION

    Average Total Asset


    Current Total Asset + Previous Total Assets
    ¿
    2

    Turn Net Sales


    Asset =
    Ratio Average Total Asset Interpretation:

    Average Inventory
    Beg . Inventory + Ending Inventory
    ¿
    2

    Turn COGS
    Inventory =
    Ratio Average Inventory Interpretation:

    Beg . A / R+ Ending A /R
    Average A/R ¿
    2

    Turn Net Credit Sales


    A /R =
    Ratio Average A / R
    Interpretation:

    D. Profitability Ratios- measure how well does an entity generate income that relates to their revenues,
    operating costs, assets, and capital.

    FORMULA COMPUTATION

    Gross Profit
    Gross Profit Ratio=
    Net Sales

    2020 2019

    Net Income
    Returnon Assets=
    Total Assets

    Interpretation:

    2020 2019

    Net income
    ReturnOn Equity=
    Sℎoulders Equity
    Interpretation:

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