Financial Statement Ratios

Liquidity

A measure of how quickly a company can turn its current assets into cash.

Working Capital

Current assets – current liabilities; measures a company’s ability to pay current liabilities.

Current Ratio

Current Assets / Current Liabilities; indicates a company’s ability to cover current liabilities with current assets.

Quick Ratio

Quick Assets / Current Liabilities; measures short-term liquidity excluding inventory.

Accounts Receivable Turnover

Sales / Average Accounts Receivable; evaluates a company’s efficiency in collecting receivables.

Days' Sales in Receivables

Average AR / Average Daily Sales; measures the average time it takes to collect payment after a sale on credit.

Inventory

Goods and materials held by a business for resale or production.

Fixed Assets to Long-Term Liabilities Ratio

Net Fixed Assets / Long Term Liabilities; reflects a company’s assets covered by long-term debt.

Debt-to-Equity Ratio

Total Liabilities / Total Stockholders’ Equity; compares total liabilities to shareholders’ equity.

Times Interest Earned (TIE) Ratio

(Income before Income Tax + Interest Expense)/Interest Expense; measures a company’s ability to meet interest obligations.

Asset Turnover

Sales / Average Total Assets; indicates effective use of assets to generate revenue.

Return on Total Assets (ROTA)

(Net Income + Interest Expense) / Average Total Assets; measures profit generated from total assets.

Return on Stockholders' Equity (ROE)

Net Income / Average Total Stockholders Equity; measures profitability relative to equity.

Earnings per Share (EPS)

(Net Income – Preferred Dividends) / Weighted Shares Outstanding; indicates profitability per common stock share.

Price to Earnings Ratio (P/E)

Market Price per Share of Common Stock / Earnings per Share on Common Stock; assesses stock valuation.

Dividends per Share

Dividends on Common Stock / Shares of Common Stock Outstanding; reflects cash returned to shareholders.

Dividend Yield

Dividends per share of Common Stock / Market Price per share of Common Stock; measures annual dividend relative to stock price.