Financial Ratios
at a Glance
Cheat Sheets
Financial Ratios at a Glance
ACTIVITY RATIOS
Meaning
Receivables turnover =
Annual sales
Average receivables
Days of sales outstanding =
365
Receivables turnover
Cost of goods sold
Average inventory
Inventory turnover =
365
Inventory turnover
Days of inventory on hand =
Payables turnover =
Purchases
Average trade payables
Number of days of payables =
Fixed assets turnover =
Revenue
Average net fixed assets
Working capital turnover =
Total assets turnover =
365
Payables turnover ratio
Revenue
Average working capital
Revenue
Average total assets
Days of sales outstanding
Cash conversion cycle = + Days of inventory on hand
- Number of days of payables
Equity turnover =
Revenue
Average total equity
The efficiency of a company in collecting its
trade receivables
The average number of days a company takes
to collect its receivables from clients
The efficiency of a company in terms of
inventory management
The average inventory processing period
The efficiency of a company in allowing trade
credit to suppliers
The average number of days a company takes
to pay its suppliers
The efficiency of a firm in utilizing its fixed
assets
The efficiency of a firm in managing its
working capital (current assets - current
liabilities)
The efficiency of a firm in using its total assets
to create revenue
The number of days a company takes to
convert its investments in inventory and other
resources into cash flows from sales
The efficiency of a firm in utilizing equity to
create revenue
Financial Ratios at a Glance
LIQUIDITY RATIOS
Meaning
Current ratio =
Quick ratio =
Cash ratio =
Current assets
Current liabilities
Cash + Marketable securities + Receivables
Current liabilities
Cash + Marketable securities
Current liabilities
Defensive Cash + Marketable securities + Receivables
interval =
Average daily expenditure
Ability to meet current liabilities
(with total current assets)
Ability to meet current liabilities
(with total current assets, excluding inventory)
Ability to meet current liabilities
(with cash and marketable securities only)
The number of days a company can cover its
average daily expenses with the use of current
liquid assets only
Financial Ratios at a Glance
SOLVENCY RATIOS
Meaning
Debt-to-equity =
Total debt
Total shareholder’s equity
Debt as a percentage of total equity
Debt-to-capital =
Total debt
Total debt + Total shareholder’s equity
Debt as a percentage of total capital
Debt-to-assets =
Total debt
Total assets
Debt as a percentage of total assets
Financial leverage =
Interest coverage =
Average total assets
Average total equity
Earnings before interest and taxes
Interest payments
Fixed charge Earnings before interest and taxes + Lease payments
coverage =
Interest payments + Lease payments
An indicator of a company’s debt financing
usage
The ability to cover interest expenses
The ability to cover interest and lease expenses
Financial Ratios at a Glance
PROFITABILITY RATIOS
Meaning
Gross profit margin =
Gross profit
Revenue
Operating profit margin =
Pre-tax margin =
Net profit margin =
Gross profitability as a percentage of total revenue
Operating income (EBIT)
Revenue
Operating profitability (before tax) as a percentage
of total revenue
EBT
Revenue
Net income
Revenue
Return on assets (ROA) =
Net profitability as a percentage of total revenue
Net income
Average total assets
Operating return on assets (ROA) =
Operating profitability (before interest and tax) as a
percentage of total revenue
Operating profit (EBIT)
Average total assets
Net profitability (excluding interest and taxes) as a
percentage of total invested funds
Net profitability (including interest and taxes) as a
percentage of total invested funds
Return on total capital =
Operating profit (EBIT)
Average total capital
Operating profitability as a percentage of total
capital
Return on Equity (RoE) =
Net income
Average equity
Net profitability as a percentage of total equity
Financial Ratios at a Glance
VALUATION RATIOS
Meaning
Earnings per Share (EPS) =
Net Income - Preferred dividends
Outstanding number of
common shares
Income earned per 1 common share outstanding
Price earnings (P/E) ratio =
Share price
Earnings per share (EPS)
The price that investors are willing to pay per $1 of
earnings
P/E ratio (company wide) =
Market capitalization
Net income
Dividend yield =
Dividend per share
Current share price
Retention rate (RR) =
Dividend payout =
Net income - Dividends declared
Net income
Dividends declared
Net income
Sustainable growth rate (g) = RR x ROE
Total price that investors are willing to pay for a
company's Net income
The "portion "of a share price that is distributed as
dividends
The "portion" of Net income that is reinvested in
the company
The "portion" of Net income that is distributed as
dividends
Equity growth rate
Financial Ratios at a Glance
DUPONT ANALYSIS
Return on Equity
(RoE)
Net income
Average equity
Net profit
margin
X
Net income
Revenue
Net profit
margin
Net income
EBT
X
Interest
burden
EBT
EBIT
Revenue
Average equity
Asset
turnover
X
Net income
Revenue
Tax burden
Equity
turnover
X
Operating
profit margin
EBIT
Revenue
Revenue
Average assets
X
Asset
turnover
Revenue
Average assets
X
Financial
leverage ratio
Average assets
Average equity
X
Financial
leverage ratio
Average assets
Average equity
Master the Finance Skills
Necessary to Succeed.
Now at
60% OFF!
Become an expert in fnancial reportingg
accounting, analysis, or modeling with our
comprehensive training program.
Learn from industry-leading instructors and gain
practical skills to advance your career.
Build your knowledge with self-paced courses and enjoy
the fexibility of online learning.
Validate your skills with exams and certifcates
demonstrating your expertise to potential employers.
Stand out in the job market with a strong resume
created with our resume builder.
Save 60% on an annual plan from the online learning program
that helped more than ¶ miÐÐion peopÐe advance their careers.
Start learning now
30-day money-back guarantee
Email: team@365financialanalyst.com