Financial analysis

Financial analysis

There are 5 ratio types (S P E L T) and 14 financial ratios:

Solvency ratios

• Debit-equity ratio = Total Debts / Share holder funds * 100
• Interest coverage ratio = Ebit / Interest expenses * 100

Profitability ratios

• Net profit ratio = Net profit / Revenue * 100
• Gross profit ratio = Gross profit / Revenue * 100
• Operational profit ratio = Ebit / Revenue * 100
• ROCE (Return on Capital Employed) = Ebit / Capital Employed * 100

Earning ratios

• P/E Ratio =  Market Price per Share/Earnings Per Share
• Earnings Per Share = (Net Income – Preferred Dividends) / (Weighted Average of Shares Outstanding)
• Return on Net Worth = Net Profit/Equity Shareholder Funds. Equity Funds = Equity+Preference+Reserves -Fictitious Assets.

Liquidity ratios

• Current ratio = Total assets / Total Liabilities
• Quick ratio = Cash and Cash equivalents + Marketable Securities + Accounts receivable / Total Liabilities

Turnover ratios

• Fixed assets turnover ratio = Net Sales /Average Fixed assets
• Inventory turnover ratio = COGS / Average Inventories
• Receivables turnover ratio = Net sales on credit / Average Receivables

Ebit = Revenue - Cost of goods sold - Operating expenses