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Ratio Analysis Formula Guide

This document defines and lists various types of financial ratios used to analyze businesses. It includes liquidity ratios to measure a company's ability to pay off short-term debts, leverage ratios to evaluate financial risk, activity ratios related to efficiency, profitability ratios, and market ratios comparing financial data to stock prices. There are over 30 individual ratios organized into categories and defined by their calculation.

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Muhammed Khalid
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51 views

Ratio Analysis Formula Guide

This document defines and lists various types of financial ratios used to analyze businesses. It includes liquidity ratios to measure a company's ability to pay off short-term debts, leverage ratios to evaluate financial risk, activity ratios related to efficiency, profitability ratios, and market ratios comparing financial data to stock prices. There are over 30 individual ratios organized into categories and defined by their calculation.

Uploaded by

Muhammed Khalid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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LIQUIDITY RATIOS

1 Current Ratio: Current Assets ÷ Current Liabilities


2 Quick Ratio (Acid Test Ratio): Current Assets - Inventory ÷ Current Liabilities
3 Cash Ratio: Current Assets - Inventory - Accts Receivables ÷ Current Liabilities
4 Operating Cash Flow Ratio: Operating Cash Flow ÷ Current Liabilities
5 Net Working Capital Ratio: Current Assets - Current Liabilities ÷ Total Assets
LEVERAGE RATIOS
For Single Period:
Contribution Margin ÷ Operating Income (Earning Before Interest & Taxes)
1 Degree of Operating Leverage:
For Multiple Periods:
% Change in Operating Income (EBIT) ÷ % Change in Sales
For Single Period:
Operating Income (EBIT) ÷ Earnings Before Tax
2 Degree of Financial Leverage:
For Multiple Periods:
% Change in Profit Before Tax ÷ % Change in Operating Income (EBIT)
3 Financial Leverage Ratio: Average Total Assets ÷ Average Total Equity
4 Debt to Equity Ratio: Total Debt ÷ Equity
5 Debt Ratio: Total Debt ÷ Total Assets
6 Long-Term Debt Ratio: Long-Term Debt ÷ Equity
7 Interest Coverage Ratio: Operating Income (EBIT) ÷ Interest Expense
8 Debt Service Coverage Ratio: Operating Income ÷ Total Debt Service
9 Fixed Charge Coverage Ratio: Earnings Before Fixed Charges and Taxes ÷ Fixed Charges
10 Cash Flow to Fixed Charges Ratio: Cash Flow from Operations + Fixed Charge + Tax Payments ÷ Fixed Charges
ACTIVITY RATIOS
1 Accounts Receivable Turnover: Credit Sales ÷ Average Gross Accounts Receivables
2 Inventory Turnover: Cost of Goods Sold ÷ Average Inventory
3 Accounts Payable Turnover: Credit Purchases ÷ Average Accounts Payables
4 Days Sales Outstanding in Receivables: 365 ÷ AR Turnover
5 Days Sales in Inventory: 365 ÷ Inventory Turnover
6 Days Purchase in Accounts Payables: 365 ÷ Accounts Payable Turnover
7 Operating Cycle: Day Sales in Inventory + Day Sales Outstanding in AR
8 Cash Cycle: Day Sales in Inventory + Day Sales Outstanding in Sales - Day Purchase in AP
9 Total Assets Turnover: Sales ÷ Average Total Assets
10 Fixed Assets Turnover: Sales ÷ Average Net Plant, Property and Equipment
PROFITABILITY RATIOS
1 Gross Margin Ratio: Gross Profit ÷ Sales
2 Operating Profit Ratio: Operating Income ÷ Sales
3 Net Profit Ratio: Net Profit ÷ Sales
Earning Before Interest, Taxes,
4 Depreciation, Amortisation (EBITDA): EBITDA ÷ Sales
5 Return on Total Assets: Net Income ÷ Average Total Assets
5 Return on Equity: Net Income ÷ Average Equity
MARKET RATIOS
1 Market to Book Ratio: Market Price Per Share ÷ Book Value Per Share
2 Price Earning Ratio: Market Price Per Share ÷ Earning Per Share
3 Price to EBITDA Ratio: Market Price Per Share ÷ EBITDA Per Share
4 Book Value Per Share: Total Share-Holders Equity - Prefered Equity ÷ Number of Common Shares Outstanding
5 Basic Earning Per Share: Net Income - Prefered Dividends ÷ Weighted Average Common Shares Outstanding
Net Income - Prefered Dividends ÷ Diluted Weighted Average Common Shares
6 Diluted Earning Per Share: Outstanding

OTHER RATIOS
1 Earning Yield: Earnings Per Share ÷ Market Price Per Common Share
2 Dividend Yield: Annual Dividens Per Share ÷ Market Price Per Share
3 Dividend Payout Ratio: Common Dividend ÷ Earnings Available to Common Share Holders

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