iv) Profitability Ratios
Profit margin
= Net income
/ Sales
Return on assets (ROA) = Net income
/ Total assets
Return on equity (ROE) = Net income
/ Total equity
ROE
/ Sales)
= (Net Income
x
(Sales
/ Assets)
x (Assets
/ Equity)
v) Market Value Ratios
Price to earnings ratio
= Price per share
/ Earnings per share
Market-to-book ratio
= Market value per share / book value per share
i) Short Term Solvency or Liquidity Ratios
Current ratio
= Current assets
/ Current liabilities
Quick Ratio
= (Current assets
- Inventory)
Cash ratio
= Cash
/ Current liabilities
Net Working Capital
= Net Working Capital
/ Total Assets
Internal measure
=
William Company
Economy
Regular
Super
Driver: Box of popcorn
Capacity
50,000
120,000
300,000
0.43
0.35
0.26
Costs
Variable:
Fixed:
Efficiency Ranges
8,000
24,125
<37500
11,000
20,000
24,125
46,000
46,000
37500-100000 100000+
a. Number of boxes for Econ an
ii) Long Term Solvency or Financial Leverage Ratios
Total debt ratio
= (Total Assets
- Total Equity)
Debt to equity ratio
= Total debt
/ Total equity
Equity Multiplier
= Total assets
/ Total equity
Long term debt ratio
= Long term debt
/ (Long term debt
T
Royal Holland
Driver: Pasenger
Relevant Range: up to 1500
Total Variable Costs
Fixed Costs
Selling Price per Customer
Variable Cost per Customer
Unit CM per Customer
324000
607500
1620
270
1350
Break-even (# of Customers)
450 part a
# of cruises per year
Term
Definition / Explaination
an indicator of whether the company will be able to meet its current
obligations (pay its bills, meets its payroll, make a loan payment, etc.)
a company has current assets exactly equal to current liabilities, it has no
Work
Ratios
Liquidity
Debt
Asset
Profit
Returns
Current Ratio
Times Interest Earned
Inventory Turns
Gross Profit
PE Ratio
Current Assets vs Current Liability
Curr Assets
Curr Liab
Curr Assets/Curr Liab
Curr Assets - Curr Liab
Days Cash
Cash
Expenses
Expenses/3