ratio analysis formulas

return on assets

 Net Income / Total Assets

Return on Equity

Net Income / Owner’s Equity

Liquid Ratio (Current Ratio)

Current Assets / Current Liabilities

Earnings per Share

Net Income / Shares Outstanding

Price-to-Earnings Ratio

Stock Price / EPS

The name of a Financial Document that tracks money in and money out over time:

Income Statement

The other name for an income statement

profit and loss statement

Money brought in by selling goods:

revenue

The amount a business directly spends to earn revenue

cost of goods sold

Subtracting revenue-cost of goods sold

gross profit

The collection of all other bill payments and other money spent:

operating expenses

Subtracting gross profit-operating expenses

net income

when net inceom is positive

profit

when net income is negative

loss

The name of a Financial Document that shows a snapshot of values owned vs values owed:

balance sheet

Things a company owns:

assets

Things a company owes

liabilities

The value of a company's investment capital

equity

Things a company owns that can be converted to cash in the short-term:

current assets

Things a company owes in the short-term

current liabilities

The ratio that measures how efficiently assets are being used:

return on assets

The ratio that measures how efficiently equity is being used:

return on equity

The ratio that measures if short-term debts can be paid:

liquid ratio/current ratio

The ratio that measures the intrinsic value of one unit of stock:

earnings per share

The ratio that compares stock price to its intrinsic value:

price to earnings ratio