Financial Ratios

Liquidity

`"Acid test ratio (Quick ratio)" = ("Quick Assets")/("Current Liabilities")`

`"Collection Period" = ("Average accounts receivables")/("Sales"/360)`

`"Current ratio" = ("Current Assets")/("Current Liabilities")`

`"Days to sell inventory" = ("Average Inventory")/("Cost of Sales"/360)`



Capital Structure and Solvency

`"Long-term debt to equity ratio" = ("Long-term liabilities")/("Shareholders' equity")`

`"Total debt to equity ratio" = ("Total liabilities")/("Shareholders' equity")`

`"Times interest earned" = ("Income before income taxes and interest expense")/("Interest expense")`



Return on Investment

`"Return on assets" = ("Net income"+"Interest expense"*(1 - "Tax rate"))/("Average total assets")`

`"Return on common equity" = ("Net income")/("Average shareholders' equity")`



Operating Performance

`"Gross profit margin" = ("Sales"-"Cost of sales")/("Sales")`

`"Net profit margin" = ("Net income")/("Sales")`

`"Operating project margin (pretax)" = ("Income from operations")/("Sales")`



Asset Utilization

`"Accounts receivable turnover" = ("Sales")/("Average accounts receivable")`

`"Cash turnover" = ("Sales")/("Average cash and equivalents")`

`"Inventory turnover" = ("Cost of sales")/("Average inventory")`

`"PPE turnover" = ("Sales")/("Average PPE")`

`"Total asset turnover" = ("Sales")/("Average total assets")`

`"Working capital turnover" = ("Sales")/("Average working capital")`



Market Measures

`"Earnings yield" = ("Earnings per share")/("Market price per share")`

`"Dividend yield" = ("Cash dividends per share")/("Market price per share")`

`"Dividend payout rate" = ("Cash dividends per share")/("Earnings per share")`

`"Price-to-earnings" = ("Market price per share")/("Earnings per share")`

`"Price-to-book" = ("Market price per share")/("Book value per share")`