6 - Ratio Analysis-Profitability ratios profit margin=net...

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Ratio Analysis 20:07 -Profitability ratios: profit margin=net income divided by sales (Income statement –IS- times two) return on assets= net income divided by assets -Asset Utilization Ratios: inventory turnover= sales divided by inventory -Liquidity ratios: current ratio= current assets divided by current liabilities -Per share ratio: earnings per share= net income divided by number of shares outstanding (IS,  BS- balance sheet) -Need Ratios to compare. Ex: starbucks vs small coffee shop can be compared  with ratios -Uses info from financial statements -Puts complex info into sharper focus -Allows us to measure performance over time -Market Capitalization Value of a company o Market value of shares outstanding o Stock price times number of shares o EX: share price is 100, shares outstanding is 500, market cap? = 50,000 10/08 -Depreciation spreading the costs over the estimated life of the asset shows as an expense on IS
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6 - Ratio Analysis-Profitability ratios profit margin=net...

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