Financial ratios are primarily tools for turning the data in financial statements into information used by managers and executives to better understand what is happening in a company. These ratios are used in evaluating an acquisition, creating Pro-forma statements related to potential courses of action, or figuring out which stock to buy or where to invest
Financial ratios can typically be grouped into six types. Each Ratios are explained in a separate post with examples for better understanding.
Click on each ratios and empower yourself in decision making by understanding financial ratios and statements.
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Market value ratios
• Dividend payout ratio
• Dividend yield
• Earnings per share (EPS)
• Enterprise value
• Price to book value ratio
• Price to earnings ratio (P/E ratio) -
Liquidity ratios
• Acid test ratio or Quick ratio
• Cash conversion cycle
• Cash ratio
• Current ratio
• Operating cash flow ratio
• Working capital ratio -
Performance ratios
• Average collection period ratio
• Fixed assets turnover ratio
• Gross profit margin ratio
• Inventory turnover ratio
• Receivable turnover ratio/Account receivable ratio
• Total assets turnover ratio -
Cash flow ratios
• Dividend payout ratio
• Free cash flow
• Operating cash flow
Profitability ratios
• Current yield
• Net profit margin
• Return on assets (ROA)
• Return on net assets (RONA)
• Return on equity (ROE)
• Return on investment (ROI)
Debt ratios
• Asset to equity ratio or Equity multiplier ratio
• Asset turnover ratio
• Cash flow to debt ratio
• Debt ratio or Debt to asset ratio or Debt to capital ratio
• Debt to equity ratio
• Interest coverage ratio
