Chapter 3: Financial Ratios
Quick Ratio Ideal range: .6-.8
CA-Inventory/CL
Current Ratio Minimum value: 1
CA/CL
Inventory Turnover
COGS/Inventory
Return on Equity (ROE)
Net Income/Total Equity
Earnings per share (EPS)
Net Income/outstanding shares
Book value per share
Net worth/shares outstanding
Asset Turnover
Sales/Assets
Price-earnings ratio (P/E)
Share price/EPS
Equity Multiplier
Total Assets/Total Equity
Solvency Ratio Minimum value: 1, should not be higher than 2
Total Assets/Total Liabilities
Debt Ratio
Total Liabilities/Total Assets
Debt/Equity Ratio
Total Liabilities/Total Equity
Average Payment Period
(AP/Purchases)(365)
Average Collection Period
(AR/Daily Sales)(365)
Times Interest Earned
EBIT/Interest Expense
Margin
EBIT/Sales
Return on Assets (ROA)
EBIT/Total Assets