Teach You How To Sum Up The Main Financial Ratios

Solvency ratio

Liquidity ratio = current assets and current liabilities measure the ability to repay current liabilities with current assets.

Acid test ratio, quick ratio) = (current assets inventory). Current liabilities measure the ability to repay current liabilities with the most liquid assets with the most liquidity.

Debt ratio

Equity ratio = total liabilities, shareholders' equity reflects the relative relationship between shareholders' capital supply and creditors' capital supply.

Asset liability ratio = total liabilities. Total assets reflect the proportion of debt financing in total assets.

Coverage ratio

Interest multiplier = interest paid before tax * interest expense reflects the ability to repay interest on loans; calculated operating profit is the multiple of interest cost.

Operating rate

Accounts receivable turnover (RT) = net annual credit sales accounts receivable * * reflects the number of accounts receivable converted into cash in the year.

It shows the quality of accounts receivable, accounts receivable turnover days (RTD) (average closing period) =365. Accounts receivable turnover rate of accounts receivable from the acquisition of rights to the average days of recovery.

Inventory turnover (IT) = selling cost. Inventory * measures the amount of inventory turnover (sale) in the year; reflects inventory flows.

Is there a backlog trend of inventory turnover days (ITD) =365? IT the average days when inventory sales are converted into accounts receivable.

Total assets turnover (capital turnover) = net sales gross assets total * * measurement of total assets, sales efficiency, profitability ratio.

Profitability ratio, sales net interest rate = net profit after tax, net sales volume measure the profit level of sales revenue; that is, the net profit from each sales revenue.

The rate of return on investment ROI (return on assets) = net profit after tax, total assets * measure the comprehensive effect of utilizing assets profit; that is, the profitability of invested capital.

Net sales rate = net profit after tax, net sales * total assets turnover, net sales amount, total assets * *

Return on equity (ROE) = net profit after tax, shareholders' equity * * to measure the profitability of shareholders' Book investment.

= sales net interest rate * total assets turnover * interest multiplier

Net profit after tax, net sales, net sales, total assets * * total assets * * stockholders' equity * *

* paying interest and making profits before tax.

* * the average value of the initial and final balances can be used without using the final balance.