COMMON FINANCIAL RATIOS:

I. Short-Term Solvency or Liquid Ratios

Current ratio = Current assets/Current liabilities

Quick ratio = (Current assets - Inventory )/Current liabilities

Cash ratio = Cash/Current liabilities

Net working capital to total assets = Net working capital/Total assets

Interval measure = Current assets/Average daily operating costs

II. Long-Term Solvency or Financial Leverage Ratios

Total debt ratio = (Total assets - Total equity)/Total assets

Debt/equity ratio = Total debt/Total equity

Equity multiplier = Total assets/Total equity

Long-term debt ratio = Long-term debt/(Long-term debt + Total equity)

Times interest earned ratio = EBIT/ Interest

Cash coverage ratio =(EBIT + Depreciation)/Interest

III. Asset Utilization or Turnover Ratios

Inventory turnover = Cost of goods sold/Inventory

Days sales in inventory= 365 days/ Inventory turnover

Receivables turnover = Sales/ Accounts receivable

WC turnover = Sales/Working capital

Fixed asset turnover = Sales/Net fixed assets

Total asset turnover = Sales/Total assets

IV. Profitability Ratios

Profit margin = Net income/ Sales

Return on assets (ROA) = Net income/Total assets

Return on equity (ROE) = Net income/Total equity

ROTC = Net income/ (Total equity + Long term debt)

V. Market Value Ratios

Price/earnings ratio = Price per share/ Earnings per share

Market-to-book ratio = Market value per share/Book value per share

Effective tax rate (ETR) = Income tax expense/Pretax income