FSA Ratios

Four Types of Ratios

1. Liquidity Ratios (Current and Quick)

2. Activity

3. Solvency

4. Profitability

Liquidity - Current

Current Assets / Current Liabilities (needs to be more than 1x)

Liquidity - Quick

(Current Assets - Inventory) / Current Liabilities (needs to be close to 1x)

Activity - A/R Turns

Revenue / Avg A/R

Activity - Inventory Turns

COGS / Avg Inventory

Activity - A/P Turns

COGS / Avg A/P

Activity - A/R DOH

365 / AR Turns

Activity - Inv DOH

365 / Inv Turns

Activity - A/P Turns

365/ AP Turns

Cash Conversion Cycle

A/R DOH + Inventory DOH - A/P DOH

Solvency - Debt Ratio

Avg Debt / Capital = %

Solvency - Interest Coverage Ratio

Operating Inc / Interest Expense = x

Solvency - Financial Leverage Multiplier

Avg Assets / Avg Equity = x

Profitability - Profit Margin

NI / Rev

Profitability - Asset Turnover

Rev / Avg Assets (x high as possible)

Profitability - Return on Assets

NI / Avg Assets (%)

Profitability - Return on Equity

NI / Avg Equity (%)

Profitability - Dupont Analysis

Profit Margin* AT * FLM