Accounting Ratios

Liquidity Ratios:

Current ratio    = Current Assets/ Current Liabilities

 

Quick (Acid-Test) Ratio = (Cash + Short Term Securities + Acc. Recv) / Current Liab.

 

Working Capital = Current Assets - Current Liabilities

 

Cash Flow from Operations to Current Liabilities ratio = CFO /Avg Curr. Liab

 

Leverage Ratios:

Debt to Equity = Total Liabilities / Total Equity

 

Debt to Asset = Total Liabilities / Total Asset

 

Financial Leverage = Total Asset / Total Equity

 

Times Interest Earned = (Net Income before Interest Expense and Taxes) / Interest Expense

 

Operating Ratios:

Accounts Receivable Turnover = Revenue / Avg. Accts. Receivables

 

Acc. Receivables Collection Period = 365 / Acc. Receivables Turnover

 

Inventory turnover = Cost of Goods Sold / Average Inventory

 

Inventory Holding Period = 365 / Inventory Turnover

 

Accounts payable turnover = Purchases/Avg. Accts. Payables

 

Asset turnover =  Revenue / Avg. Assets

 

Profitability Ratios:

Gross Margin percentage =  100% * (Revenue - CGS) / Revenue

 

 Profit Margin       = Net Income / Revenue

 

Return on Assets = [Net Income + Interest Expense x (1 - Tax Rate)] / Avg. Assets

 

Return on Equity = (Net Income - Preferred Dividends) / Avg. Equity (excluding Pref. Stock)

 

Market Ratios

P/E  ratio = Price per share /Earnings per share

 

Dividend per share = Dividends / Number of shares

 

Dividend yield  = Dividend per share / Price per share

 

Dividend payout ratio = Dividends per share / Earnings per share è Dividend yield*P/E ratio

 

Book value per share = (Total Shareholder’s Equity- Pref. Stock) / Number of common shares

Market to Book = Market value per share / Book value per share