Financial Metrics Board Deck

Meaning: Total Liabilities to Ending Equity

Measures overall leverage by comparing all liabilities (current + long-term) to shareholders equity at period end.

Meaning: Total Liabilities to Ending Equity

Measures overall leverage by comparing all liabilities (current + long-term) to shareholders equity at period end.

Interpretation: Total liabilities to ending equity

A ratio of 1.8 means $1.80 of liabilities for every $1 of equity. Higher ratios indicate more reliance on debt financing.

Meaning: total debt to equity

Focuses only on interest-bearing debt (short and long-term) relative to equity.

Interpretation: Total Debt to Equity

A ratio of 1.3 suggests $1.30 of debt for every $1 of equity. It’s narrower than total liabilities because it excludes non-debt obligations like accounts payable.

Meaning: Funded Debt / EBITDA

Compares funded debt (long-term borrowings) to EBITDA, a proxy for cash operating earnings.

Interpretation: Funded Debt / EBITDA

A ratio of 2.5 means it would take about 2.5 years of EBITDA to pay off funded debt. Lenders often set covenants here (e.g., max 3.5)

Meaning: Return on Total Beg. Avg. Operating Assets (ROOA)

Measures profitability relative to operating assets deployed at the start of the period.

Interpretation: Return on Total Beg. Avg. Operating Assets (ROOA)

A ROOA of 11% means the business generated an 11% return on its operating asset base.

Formula: ROOA

R12 PBT / Avg. Assets in Current Month

How they compare

Leverage metrics: 1&2 show capital structure risk—how much debt vs. equity

Coverage metric: indicates ability to service debt from operating earnings

Profitability metric: reflects efficiency in using assets to generate returns.

Together these metrics answer

How leverage are we? Can we cover debt? Are we earning enough on assets?