Financial Ratios


Liquidity Measurement Ratios

Current Ratio CurrentAssetsCurrentLiabilities\dfrac{Current Assets}{Current Liabilities} 3.16 A current ratio of 1.0 or greater is an indication that the company is well-positioned to cover its current or short-term liabilities.
Quick Ratio CashandCashEquivalents+ShortTermInvestments+AccountReceivablesCurrentLiabilities\dfrac{Cash and Cash Equivalents + Short-Term Investments + Account Receivables}{Current Liabilities} 1.65 The quick ratio is more conservative than the current ratio because it excludes inventory and other current assets, which generally are more difficult to turn into cash. A higher quick ratio means a more liquid current position.
Cash Ratio CashandCashEquivalentsTotalCurrentLiabilities\dfrac{Cash and Cash Equivalents}{Total Current Liabilities} 0.95 The cash ratio is almost like an indicator of a firm’s value under the worst-case scenario where the company is about to go out of business.
Days of Sales Outstanding (AccountReceivable(start)+AccountReceivable(end))/2Revenue/365\dfrac{(Account Receivable (start) + Account Receivable (end))/2}{Revenue/365} -186.38 DSO tells you how many days after the sale it takes people to pay you on average.
Days of Inventory Outstanding (Inventories(start)+Inventories(end))/2COGS/365\dfrac{(Inventories (start) + Inventories (end))/2}{COGS/365} 74.60 DIO tells you how many days inventory sits on the shelf on average.
Days of Payables Outstanding (AccountsPayable(start)+AccountsPayable(end))/2COGS/365\dfrac{(Accounts Payable (start) + Accounts Payable (end))/2}{COGS/365} 19.33 DPO tells you how many days the company takes to pay its suppliers.

Profitability Indicator Ratios

Gross Profit Margin GrossProfitRevenue\dfrac{Gross Profit}{Revenue} 0.54 You can think of it as the amount of money from product sales left over after all of the direct costs associated with manufacturing the product have been paid.
Pretax Profit Margin IncomeBeforeTaxRevenue\dfrac{Income Before Tax}{Revenue} 0.37 Profit is the main goal of for-profit organizations. The goal is to make a profit through growth and to grow every year. As a result, one of the most important roles of the financial and investment analyst is to track and forecast profitability.
Effective Tax Rate ProvisionForIncomeTaxesIncomeBeforeTax\dfrac{Provision For Income Taxes}{Income Before Tax} 0.20 If there’s one takeaway, it should be that a company’s tax situation is all but a living, breathing organism in its own right.
Return On Assets NetIncomeAverageTotalEquity\dfrac{Net Income}{Average Total Equity} 0.22 ROA Return on assets gives an indication of the capital intensity of the company, which will depend on the industry; companies that require large initial investments will generally have lower return on assets. ROAs over 5% are generally considered good.
Return On Equity NetIncomeAverageTotalAssets\dfrac{Net Income}{Average Total Assets} -0.31 ROE this ratio calculates how much money is made based on the investors' investment in the company.investors want to see a high return on equity ratio because this indicates that the company is using its investors' funds effectively.
Return On Capital Employed EBITAverageTotalAssetAverageCurrentLiabilities\dfrac{EBIT}{Average Total Asset − Average Current Liabilities} 0.09 ROCE shows investors how many dollars in profits each dollar of capital employed generates.
NIperEBT NetIncomeEBT\dfrac{Net Income}{EBT} 0.80 NIperEBT.
EBITperRevenue EBITRevenue\dfrac{EBIT}{Revenue} 0.38 EBITperRevenue.

Debt Ratios

Debt Ratio TotalLiabilitiesTotalAssets\dfrac{Total Liabilities}{Total Assets} 1.04 The debt ratio tells us the degree of leverage used by the company.
Debt Equity Ratio TotalDebtTotalEquity\dfrac{Total Debt}{Total Equity} -5.84 This is a measurement of the percentage of the company’s balance sheet that is financed by suppliers, lenders, creditors and obligors versus what the shareholders have committed.
Long-term Debt to Capitalization LongTermDebtLongTermDebt+ShareholdersEquity\dfrac{Long−Term Debt}{Long−Term Debt + Shareholders Equity} 1.21 While a high capitalization ratio can increase the return on equity because of the tax shield of debt, a higher proportion of debt increases the risk of bankruptcy for a company.
Total Debt to Capitalization TotalDebtTotalDebt+ShareholdersEquity\dfrac{Total Debt}{Total Debt + Shareholders Equity} 1.21 Capitalization ratio describes to investors the extent to which a company is using debt to fund its business and expansion plans.
Interest Coverage Ratio EBITInterestExpense\dfrac{EBIT}{Interest Expense} 2.29 The lower a company’s interest coverage ratio is, the more its debt expenses burden the company.
Cash Flow to Debt Ratio OperatingCashFlowsTotalDebt\dfrac{Operating Cash Flows}{Total Debt} 0.06 The cash flow to debt ratio reveals the ability of a business to support its debt obligations from its operating cash flows.

Operating Performance Ratios

Fixed Asset Turnover RevenueNetPPE\dfrac{Revenue}{NetPPE} 6.90 Calculates how efficiently a company is a producing sales with its machines and equipment.
Asset Turnover RevenueTotalAverageAssets\dfrac{Revenue}{Total Average Assets} 0.32 The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

Cash Flow Indicator Ratios

Cash Flow Coverage Ratios OperatingCashFlowTotalDebt\dfrac{Operating Cash Flow}{Total Debt} 0.06 The operating cash flow is simply the amount of cash generated by the company from its main operations, which are used to keep the business funded.
Short-Term Coverage Ratios OperatingCashFlowShortTermDebt\dfrac{Operating Cash Flow}{Short-Term Debt} 2.36 The short-term debt coverage ratio compares the sum of a company's short-term borrowings and the current portion of its long-term debt to operating cash flow.
Capital Expenditure Coverage Ratios OperatingCashFlowCapitalExpenditure\dfrac{Operating Cash Flow}{Capital Expenditure} 10.00 The larger the operating cash flow coverage for these items, the greater the company's ability to meet its obligations, along with giving the company more cash flow to expand its business, withstand hard times, and not be burdened by debt servicing and the restrictions typically included in credit agreements.
Dividend Payout Ratio DPS(DividendperShare)EPS(NetIncomeperShareNumber\dfrac{DPS (Dividend per Share)}{EPS (Net Income per Share Number} 1.92 The dividend payout ratio is an indicator of how well earnings support the dividend payment.

Investment Valuation Ratios

Price Book Value Ratio StockPriceperShareEquityperShare\dfrac{Stock Price per Share}{Equity per Share} 0.00 The price-to-book value ratio, expressed as a multiple (i.e. how many times a company's stock is trading per share compared to the company's book value per share), is an indication of how much shareholders are paying for the net assets of a company.
Price Cash Flow Ratio StockPriceperShareOperatingCashFlowperShare\dfrac{Stock Price per Share}{Operating Cash Flow per Share} 0.00 The price/cash flow ratio is used by investors to evaluate the investment attractiveness, from a value standpoint, of a company's stock.
Price Earnings Ratio StockPriceperShareEPS\dfrac{Stock Price per Share}{EPS} 37.62 The financial reporting of both companies and investment research services use a basic earnings per share (EPS) figure divided into the current stock price to calculate the P/E multiple (i.e. how many times a stock is trading (its price) per each dollar of EPS).
Enterprise Value Multiplier EntrepriseValueEBITDA\dfrac{Entreprise Value}{EBITDA} 8.16 Overall, this measurement allows investors to assess a company on the same basis as that of an acquirer. As a rough calculation, enterprise value multiple serves as a proxy for how long it would take for an acquisition to earn enough to pay off its costs in years(assuming no change in EBITDA).