Ratios used for Equity analysis

 
Liquidity Analysis Ratios   
   
Current Ratio
    Current Assets
  Current Ratio = ------------------------
    Current Liabilities
      
Quick Ratio
    Quick Assets
  Quick Ratio = ----------------------
    Current Liabilities
     
Quick Assets = Current Assets - Inventories
   
Net Working Capital Ratio
    Net Working Capital
  Net Working Capital Ratio = --------------------------
    Total Assets
     
Net Working Capital = Current Assets - Current Liabilities
   
 
Profitability Analysis Ratios   

Return on Assets (ROA)

    Net Income
  Return on Assets (ROA) = ----------------------------------
    Average Total Assets
     
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
   
Return on Equity (ROE)
    Net Income
  Return on Equity (ROE) = --------------------------------------------
    Average Stockholders' Equity
     
Average Stockholders' Equity 
= (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2
   
Return on Common Equity (ROCE)
    Net Income
  Return on Common Equity = --------------------------------------------
    Average Common Stockholders' Equity
     
Average Common Stockholders' Equity 
= (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity) / 2
   
Profit Margin
    Net Income
  Profit Margin = -----------------
    Sales
     
     
Earnings Per Share (EPS)
    Net Income
  Earnings Per Share = ---------------------------------------------
    Number of Common Shares Outstanding
     
   
 
Activity Analysis Ratios   

Assets Turnover Ratio

    Sales
  Assets Turnover Ratio = ----------------------------
    Average Total Assets
     
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
   
Accounts Receivable Turnover Ratio
    Sales
  Accounts Receivable Turnover Ratio = -----------------------------------
    Average Accounts Receivable
     
Average Accounts Receivable 
= (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
   
Inventory Turnover Ratio
    Cost of Goods Sold
  Inventory Turnover Ratio = ---------------------------
    Average Inventories
     
Average Inventories = (Beginning Inventories + Ending Inventories) / 2
   

Capital Structure Analysis Ratios   

Debt to Equity Ratio

    Total Liabilities
  Debt to Equity Ratio = ----------------------------------
    Total Stockholders' Equity
     
     
Interest Coverage Ratio
    Income Before Interest and Income Tax Expenses
  Interest Coverage Ratio = -------------------------------------------------------
    Interest Expense
     
Income Before Interest and Income Tax Expenses 
= Income Before Income Taxes + Interest Expense
   

Capital Market Analysis Ratios   

Price Earnings (PE) Ratio

    Market Price of Common Stock Per Share
  Price Earnings Ratio = ------------------------------------------------------
    Earnings Per Share
     
     
Market to Book Ratio
    Market Price of Common Stock Per Share
  Market to Book Ratio = -------------------------------------------------------
    Book Value of Equity Per Common Share
     
Book Value of Equity Per Common Share 
= Book Value of Equity for Common Stock / Number of Common Shares
   
Dividend Yield
    Annual Dividends Per Common Share
  Dividend Yield = ------------------------------------------------
    Market Price of Common Stock Per Share
     
Book Value of Equity Per Common Share 
= Book Value of Equity for Common Stock / Number of Common Shares
   
Dividend Payout Ratio
    Cash Dividends
  Dividend Payout Ratio = --------------------
    Net Income
     
     
 
ROA = Profit Margin X Assets Turnover Ratio   

ROA = Profit Margin X Assets Turnover Ratio

    Net Income Net Income Sales
  ROA = ------------------------  = --------------  X ----------------
    Average Total Assets  Sales Average Total
       
Profit Margin = Net Income / Sales 
Assets Turnover Ratio = Sales / Averages Total Assets