Financial ratios in financial statements

FINANCIAL RATIOS IN
FINANCIAL STATEMENTS

• Profitability ratios.
• Financial leverage ratios.
• Liquidity ratios.
• Market value ratios.

PLAN:
PROFITABILITY RATIOS
Return on Assets, ROA
an indicator of how well a company utilizes its assets, by determining how profitable a company is relative to its total assets
Return on Assets = Net Income / Average Total Assets
Return on Current Assets, RCA
demonstrates the company's ability to provide a sufficient amount of profit in relation to the company's working capital used
RCA = Net income / Current assets
Return on Fixed Assets, RFA
demonstrates the ability of an enterprise to provide a sufficient amount of profit in relation to the company's fixed assets
RFA = Net income / Fixed assets
Return on Equity, Return on Shareholders’ Equity, ROE
a measure of financial performance calculated by dividing net income by shareholders' equity. ROE is considered a measure of the profitability of a corporation in relation to stockholders’ equity
ROE = Net Income / Average Shareholder's Equity
Return on Sales, ROS
a ratio used to evaluate a company's operational efficiency. This measure provides insight into how much profit is being produced per dollar of sales.
ROS = EBIT / Revenue * 100%
Return on investment, ROI
a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
ROI = (Current value of investment – cost of investment) / Cost of investment
PROFITABILITY RATIOS
Gross Margin Ratio, GPM
a metric analysts use to assess a company's financial health by calculating the amount of money left over from product sales after subtracting the cost of goods sold (COGS).
GPM = Gross profit / Revenue
GPM = (Revenue – cost of goods sold) / Revenue