FINANCIALANALYSISTOOLSProfit Ratios:Measure the efficiency with which the company uses its resources.Useful for comparing performanceto competitors or benchmarking performance over time.Gross Profit Margin =Sales Revenue – COGSSales RevenueReturn on Total Assets =Net IncomeTotal AssetsNet Profit Margin =Net IncomeSales RevenueReturn on Stockholders’Equity =Net IncomeStockholders’ EquityLiquidity Ratios:Measures the company’s ability to meet short-term obligations. Results <1 suggest solvency problems.Current ratio =Current AssetsCurrent LiabilitiesQuick Ratio (Acid Test) =Current Assets-InventoryCurrent LiabilitiesActivity Ratios:Measures how effectively the company is managing its assets.Inventory Turnover =COGSInventoryAverage Collection Periodor Days Sales Outstanding(DSO) =Accounts ReceivableTotal Sales/360Leverage Ratios:Measures the balance between debt and equity, or thecapital structure.Too little use of debt can suggest that stock is
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Net Income,Generally Accepted Accounting Principles,Dividend yield,total assets,Price per share