CHAPTER 4 - Ratio Analysis Ratios are RELATIVE measure of...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Ratio Analysis Ratios are RELATIVE measure of business performance Trend analysis same company over time Benchmark analysis vs. key competitors (usually industry average) Liquidity Ratios indicate ability to pay off short term debt as it is due Current Ratio CA/CL Quick (acid-test) Ratio (CA-Inventory)/CL HIGH OR LOW? How efficiently the firm uses its assets (investments) Inventory TO = cost goods sold/av. Inv Days Sales Outstanding (Av. Collection Period) = Accts. Rec./daily sales Fixed Asset TO = Sales/Net Fixed Assets Total Asset TO = Sales/Total Assets Amount of Debt: Debt Ratio = Total Liabilities/Total Assets Equity Multiplier = Total Assets/Common Equity Risk Associated with Debt: Times Interest Earned = EBIT/Interest Expense Profitability of Sales Gross Profit Margin Gross Profit (sales cgs)/Sales Operating Profit Margin EBIT/Sales Net Profit Margin Net Profit/Sales...
View Full Document

This document was uploaded on 11/01/2011 for the course FIN 301 at Miami University.

Page1 / 10

CHAPTER 4 - Ratio Analysis Ratios are RELATIVE measure of...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online