ratios for security analysis basic .pptx

a view document for brain storming

1. Key Concepts: Liquidity Ratios : Measure a company's ability to meet short-term obligations. Current Ratio : Current Assets/Current Liabilities\text{Current Assets} / \text{Current Liabilities}Current Assets/Current Liabilities Quick Ratio : (Current Assets−Inventories)/Current Liabilities(\text{Current Assets} - \text{Inventories}) / \text{Current Liabilities}(Current Assets−Inventories)/Current Liabilities Profitability Ratios : Assess a company's ability to generate profit. Net Profit Margin : Net Income/Revenue\text{Net Income} / \text{Revenue}Net Income/Revenue Return on Assets (ROA) : Net Income/Total Assets\text{Net Income} / \text{Total Assets}Net Income/Total Assets Return on Equity (ROE) : Net Income/Shareholder’s Equity\text{Net Income} / \text{Shareholder's Equity}Net Income/Shareholder’s Equity Leverage Ratios : Measure the extent of a company's financing through debt. Debt-to-Equity Ratio : Total Debt/Shareholder’s Equity\text{Total Debt} / \text{Shareholder's Equity}Total Debt/Shareholder’s Equity Interest Coverage Ratio : EBIT/Interest Expense\text{EBIT} / \text{Interest Expense}EBIT/Interest Expense

2. Efficiency Ratios : Evaluate how effectively a company uses its assets. Asset Turnover Ratio : Revenue/Total Assets\text{Revenue} / \text{Total Assets}Revenue/Total Assets Inventory Turnover Ratio : Cost of Goods Sold/Average Inventory\text{Cost of Goods Sold} / \text{Average Inventory}Cost of Goods Sold/Average Inventory