14_MCACheatSheetRatios_1 - Profit Ratios FINANCIAL ANALYSIS TOOLS Measure the efficiency with which the company uses its resources Useful for comparing

14_MCACheatSheetRatios_1 - Profit Ratios FINANCIAL ANALYSIS...

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F INANCIAL A NALYSIS T OOLS Profit Ratios: Measure the efficiency with which the company uses its resources. Useful for comparing performance to competitors or benchmarking performance over time. Gross Profit Margin = Sales Revenue – COGS Sales Revenue Return on Total Assets = Net Income Total Assets Net Profit Margin = Net Income Sales Revenue Return on Stockholders’ Equity = Net Income Stockholders’ Equity Liquidity Ratios: Measures the company’s ability to meet short-term obligations. Results <1 suggest solvency problems. Current ratio = Current Assets Current Liabilities Quick Ratio (Acid Test) = Current Assets-Inventory Current Liabilities Activity Ratios: Measures how effectively the company is managing its assets. Inventory Turnover = COGS Inventory Average Collection Period or Days Sales Outstanding (DSO) = Accounts Receivable Total Sales/360 Leverage Ratios: Measures the balance between debt and equity, or the capital structure . Too little use of debt can suggest that stock is
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  • Fall '13
  • Net Income, Generally Accepted Accounting Principles, Dividend yield, total assets, Price per share

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