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Comprehensive Ratio Analysis Guide

The document outlines various types of financial ratios used in ratio analysis, categorized into five main types: Liquidity, Solvency, Profitability, Turnover, and Market Value ratios. Each category includes specific ratios such as Current Ratio, Debt-Equity Ratio, Gross Profit Ratio, and P/E Ratio, along with their definitions and significance. These ratios are essential for assessing a company's financial health and performance.

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43 views13 pages

Comprehensive Ratio Analysis Guide

The document outlines various types of financial ratios used in ratio analysis, categorized into five main types: Liquidity, Solvency, Profitability, Turnover, and Market Value ratios. Each category includes specific ratios such as Current Ratio, Debt-Equity Ratio, Gross Profit Ratio, and P/E Ratio, along with their definitions and significance. These ratios are essential for assessing a company's financial health and performance.

Uploaded by

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

Types of

Ratio Analysis

Liquidity Solvency Profitability Turnover Market Value


Ratios Ratios Ratios Ratios Ratios

Current Gross Profit Fixed assets


Debt to P/e Ratio
Ratio ratio turnover
Equity Ratio
Net Profit Earning
Quick Interest Ratio per share
Inventory
Ratio Coverage
Operating turnover
Ratio Return on
Profit Ratio Ratios
Cash Net Worth
Ratio Return on Receivables
Capital turnover
Employed Ratios
LIQUIDITY
RATIOS
CURRENT QUICK CASH
RATIO RATIO RATIO
It measures a It measures a It measures a
firm's company's company's
capability to ability to meet ability to cover
meet its short- its short-term its debt
term debt that debt with its obligations
is due in less most liquid using only its
than a year. instruments. cash holdings.
CURRENT ASSETS
CURRENT
RATIO
CURRENT LIABILITIES

(CURRENT ASSETS-INVENTORY-
QUICK PREPAID EXPENSES)
RATIO
CURRENT LIABILITIES

CASH
CASH
RATIO
CURRENT LIABILITIES
SOLVENCY
RATIOS

DEBT-EQUITY INTEREST COVERAGE


RATIO RATIO

It measures the extent It represents how


to which a company many times the
is financed with debt company’s profits can
relative to equity. cover its interest
expense.
DEBT-EQUITY TOTAL DEBT
RATIO
SHAREHOLDER'S EQUITY

INTEREST EBIT
COVERAGE
RATIO INTEREST EXPENSE
PROFITABILITY
RATIOS

GROSS PROFIT NET PROFIT


RATIO RATIO
It measures the
It measures how much
profitability of a
profit a company
company by
makes as a
subtracting Cost of
percentage of total
Goods Sold (COGS)
revenue.
from the overall profit
figure.
PROFITABILITY
RATIOS

OPERATING PROFIT RETURN ON


RATIO CAPITAL EMPLOYED
It measures how much
It represents the
profit a company
company’s
generates from net sales
profitability with the
after accounting for the
capital invested in the
cost of goods sold and
business.
operating expenses.
GROSS GROSS PROFIT
PROFIT
RATIO
NET SALES

NET NET PROFIT


PROFIT
RATIO NET SALES
OPERATING EBIT
PROFIT
RATIO
NET SALES

RETURN ON EBIT
CAPITAL
EMPLOYED
RATIO CAPITAL EMPLOYED
TURNOVER
RATIOS
ASSET RECEIVABLE INVENTORY
TURNOVER TURNOVER TURNOVER
RATIO RATIO RATIO
It represents the It reflects the It calculates how
efficiency of the efficiency of the much inventory
company to company to must be kept on
generate collect its hand to support
revenue from its receivables. a certain level of
assets. sales.
ASSET NET SALES
TURNOVER
RATIO AVERAGE FIXED ASSETS

NET CREDIT SALES


RECEVABLE
TURNOVER
RATIO AVERAGE RECEVABLES

COGS
INVENTORY
TURNOVER
RATIO AVERAGE INVENTORIES
MARKET VALUE
RATIOS

EARNING RETURN ON
P/E RATIO
PER SHARE NET WORTH
It is the It indicates the It denotes the
relationship company's profit earning
between a profitability by capacity of the
showing how much
company's company on the
money a business
stock price and shareholder's
makes for each
earnings per invested
share of its stock.
share. amount.
MARKET PRICE PER SHARE
P/E RATIO
EARNING PER SHARE

NET INCOME-PREFERRED DIVIDENDS


EARNING
PER SHARE WEIGHTED AVERAGE OF SHARES
OUTSTANDING

NET PROFIT
RETURN ON
NET WORTH
SHAREHOLDER FUNDS

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