Financial report _ due sunday
1. Current Ratio: This ratio measures a company’s ability to pay its short-term liabilities with its current assets, and is calculated by dividing total current assets by total current liabilities.
2. Quick Ratio: This ratio also measures a company’s liquidity position, but it removes inventory from the equation in order to get a more accurate picture of cash availability. It is calculated by subtracting inventories from current assets and then dividing the result by total current liabilities.
Financial Leverage Ratios:
1. Debt-to-Equity Ratio: This ratio shows how much debt a company has compared to its equity and is used to measure financial risk. It is calculated by dividing total debt by shareholders’ equity.
2. Interest Coverage Ratio :This ratio indicates how easily a company can pay interest on its outstanding debt, and is determined by dividing EBIT (Earnings Before Interest & Taxes) by interest payments due on outstanding debts.
Asset Management Ratios:
1. Inventory Turnover Ratio:This ratio measures how quickly a business moves its inventory over time, and helps identify areas where excess stock can be trimmed down for cost savings purposes .It is determined through the formula (Cost of Goods Sold / Average Inventory).
2 Asset Utilization Ratio :This metric evaluates how effectively an organization utilizes its resources ,and can be found using the following calculation (Net Sales/ Total Assets).
Profitability Ratios : 1 Return on Equity :This ratio reflects the profitability of an organization relative to investment levels made into it, and can be found with this formula (Net Income/ Shareholder’s Equity). 2 Profit Margin :This figure shows what percentage of each dollar earned remains as net profit after all expenses are taken into consideration ,and can be computed through this expression (Net Income/ Net Sales) .
Market Value Ratios : 1 Price Earnings(PE)ratio :It gauges investor sentiment towards a brand or sector while also providing insight into overall market conditions ,and it equals market capitalization divided by earnings per share . 2 Dividend Yield Ratio : This figure provides information about potential dividend income that could accrue from owning shares in particular stocks ,computed as dividends per share divided by price per share.