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Financial Ratios Analysis Overview

The document defines and provides formulas for various financial ratios used to analyze a company's liquidity, efficiency, solvency, profitability, and investment potential. These ratios include the current ratio, cash ratio, acid-test ratio, inventory turnover, days' sales in inventory, gross profit percentage, debt ratio, debt-to-equity ratio, profit margin ratio, return on assets, asset turnover ratio, return on equity, earnings per share, price-earnings ratio, dividend yield, and dividend payout ratio. The document also provides an example company's 2015 annual report figures to calculate some of these ratios and compares them to industry averages.

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7 views6 pages

Financial Ratios Analysis Overview

The document defines and provides formulas for various financial ratios used to analyze a company's liquidity, efficiency, solvency, profitability, and investment potential. These ratios include the current ratio, cash ratio, acid-test ratio, inventory turnover, days' sales in inventory, gross profit percentage, debt ratio, debt-to-equity ratio, profit margin ratio, return on assets, asset turnover ratio, return on equity, earnings per share, price-earnings ratio, dividend yield, and dividend payout ratio. The document also provides an example company's 2015 annual report figures to calculate some of these ratios and compares them to industry averages.

Uploaded by

api-308136216
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Ratio

(Taken f

Liquidity (Ability to pay current liabilites)


Working Capital: Current Assets - Current Liabilities

Current Ratio: Total Current Assets/Total Current Liabilities

Cash Ratio: (Cash + Cash Equivalents)/Total Current Liabilities

Acid-test Ratio: (Cash + Short-term Investments + Net Current Receivables) / Total Current Liabilitie

Efficiency (Ability to Sell Merchandise Inventory and Collect Receivables)


Inventory Turnover: COGS/Average Merchandise Inventory

Day's Sales in Inventory: 365 Days/Inventory Turnover

Gross Profit Percentage: Gross Profit/Net Sales Revenue

Accounts Receivable Turnover Ratio: (not applicable)


Days' Sales in Receivables: (not applicable)

Solvency: (Ability to Pay Long-term Debt)


Debt Ratio: (Total Liabilities/Total Assets)

Debt to Equity Ratio: (Total Liabilities/Total Equity)

Profitability: (Evaluating Profitability)


Profit Margin Ratio: Net Income/Net Sales

Rate of Return on Total Assets: (Net Income + Interest Expense)/Average Total Assets

Asset Turnover Ratio: Net Sales/Average Total Assets

Rate of Return on Common Stockholders' Equity: (NI - Preferred Dividends)/ Avg. Common Stock

Earnings Per Share: (NI - Preferred Dividends)/Weighted Average of Common Shares Outstanding

Investment Potential: (Evaluating Stock as an Investment)


Price Per Earnings Ratio: Market Price Per Share of Common Stock/Earnings Per Share

Dividend Yield: Annual Dividends Per Share / Market Price Per Share

Dividend Payout: Annual Dividend Per Share / Earnings Per Share

pendix B
Corporation
Financial Analysis
015 Annual Reports)

From 2015 Report


Current Assets
Current Liabilities
Working Capital:

Industry Average
30-Jan-16
14130
12622
1508

Current Assets
Current Liabilities
Current Ratio:

14130
12622
1.12

Cash and Cash Equivalents


Total Current Liabilities
Cash Ratio:

4046
12622
0.32

Cash +ST Investments


Net Current Receivables
Total Current Liabilities
Acid-test Ratio:

2.65

4046
750.36
12622
0.38

0.5

30-Jan-16
51,997
8601
6.05

2.73

From 2015 Report


COGS
Average Merchandise Inventory
Inventory Turnover
365 Days
Inventory Turnover
Day's Sales in Inventory:
Gross Profit
Net Sales Revenue
Gross Profit Percentage

365
6.04545983
60.38
21788
73785
29.53%

From 2015 Report


Total Liabilities
Total Assets

27305
40262

Debt Ratio:

0.678

Total Liabilities
Total Equity
Debt to Equity Ratio:

27305
12957
2.107

From 2015 Report


Net Income
Net Sales
Profit Margin Ratio:
Net Income + Interest Expense
Average Total Assets
Rate of Return on TTL Assets:
Net Sales
Average Total Assets
Asset Turnover Ratio:

3363
737.5
4.56
327330
40262
8.13
737.5
40262
1.83%

NI - Pref Dividends
Avg. CSH Equity
Rate of Return on CSH Equity:

323277
12957
24.95

NI - Pref Dividentds
Weighted Avg CS Outst
EPS:

323277
60881
5.31

From 2015 Report


Market Price Per Share
Earnings Per Share
Price Per Earnings Ratio:

71.69
5.31
13.5

Annual Dividend Per Share


Market Price Per Share
Dividend Yield:

2.2
71.69
3.1%

Annual Dividend Per Share


Earnings Per Share
Dividend Payout:

2.2
5.31
0.41

Comparison to Industry Average

1.53 less

0.12 less

3.32 more

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