Financial Ratios

Measures the extent to which a company relies on debt to finance its operations and assets.

• Leverage ratio or solvency ratio

• Liquidity Ratio

• Profitability Ratio

• ACTIVITY Ratios

Indicates how efficient a company's operations are.

• Leverage ratio or solvency ratio

• Liquidity Ratio

• Profitability Ratio

• ACTIVITY Ratios

Average collection period

• Measures the number of times a company collects its average accounts receivable balance.

• the average number of days it takes a business to collect and convert its accounts receivable into cash.

• Helps investors understand how effectively companies are using their assets to generate sales.

• Indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents.

Asset Turnover

• Measures the number of times a company collects its average accounts receivable balance.

• the average number of days it takes a business to collect and convert its accounts receivable into cash.

• Helps investors understand how effectively companies are using their assets to generate sales.

• Indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents.

Net Profit Margin

• Measures a company's ability to generate profits from its total assets.

• A measure of the profitability of a business in relation to its equity.

• Measures how much net income or profit is generated as a percentage of revenue.

• Indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents.

Return on Equity: ROE

• Measures a company's ability to generate profits from its total assets.

• A measure of the profitability of a business in relation to its equity.

• Measures how much net income or profit is generated as a percentage of revenue.

• Helps investors understand how effectively companies are using their assets to generate sales.

Current Ratio

• Measures a company’s ability to pay short-term obligations or those due within one year.

• Measure how much debt a company owns compared to its assets.

• Measures the ability of a business to pay its short-term liabilities by having assets that are readily convertible into cash. These assets are, namely, cash, marketable securities, and accounts receivable.

• Indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents.

Quick ratio

• Measures a company’s ability to pay short-term obligations or those due within one year.

• Measure how much debt a company owns compared to its assets.

• Measures the ability of a business to pay its short-term liabilities by having assets that are readily convertible into cash. These assets are, namely, cash, marketable securities, and accounts receivable.

• Indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents.

Time interest earned

• Measure how much debt a company owns compared to its assets.

• The degree to which a company is financing its operations with debt rather than its own resources.

• Measures a company's ability to generate profits from its total assets.

• Assess a company's ability to meet its interest obligations

TOTAL DEBT TO TOTAL ASSET RATIO

• Assess a company's ability to meet its interest obligations

• Measure how much debt a company owns compared to its assets.

• Measures a company's ability to generate profits from its total assets.

• Indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents.