Ratios__chapter_2 - Debt to total assets ratio=total...

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New Company, Inc. Statement of Stockholder's Equity For the year ended 12/31/01 Common Stock Retained Earnings Opening Balance 0 0 Issued 100 shares Common Stock 2/1/01 10,000 Net Income F/Y/E 12/31/01 23,000 Less: Dividends Paid 12/31/01 ____________ (2,000) Balance 12/31/021 10,000 21,000 ===== ===== Balance Sheet Ratios Liquidity- ability to pay short-term debt 1). Working Capital=current assets-current liabilities >working capital, >chance of paying short term debt 2). Current Ratio=current assets/current liabilities >current ratio, >chance of paying short term debt Solvency- ability to survive over a long period of time
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Unformatted text preview: Debt to total assets ratio=total debts/total assets >debt to assets ratio, less likely to pay debts Income Statement Ratios Profitability 1). Earnings per Share = (Net Income – Preferred Stock Dividends)/ Average # common stock shares 2). Price Earnings Ratio = Stock price per share/ EPS Cash Flow Statement Ratios Liquidity Current Cash debt coverage (ccdc) Cash from operations/average current liabilities >ccdc=>liquidity Solvency Cash debt coverage (cdc) Cash from operations/average total liabilities >cdc=>solvency...
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