Corporate finance ratios pdf

All ratios

Financial ratios can be computed using data found in financial statements such as the balance sheet and income statement.
In general, there are four categories of ratio analysis: profitability, liquidity, solvency, and valuation..

All ratios

Ratio analysis refers to the analysis and interpretation of the figures appearing in the financial statements (i.e., Profit and Loss Account, Balance Sheet and Fund Flow statement etc.).
It is a process of comparison of one figure against another..

How do companies use financial ratios?

Ratios measure the relationship between two or more components of financial statements.
They are used most effectively when results over several periods are compared.
This allows you to follow your company's performance over time and uncover signs of trouble..

How to do financial analysis using ratios?

The two key financial ratios used to analyse solvency are:

1. Total -debt ratio = total liabilities divided by total assets
2. Debt-to-equity ratio = total liabilities divided by (total assets minus total liabilities)

Types of ratios in accounting

Common Accounting Ratios

1. Debt-to-Equity Ratio = Liabilities (Total) / Shareholder Equity (Total)
2. Debt Ratio = Total Liabilities/Total Assets
3. Current Ratio = Current Assets/Current Liabilities
4. Quick Ratio = [Current Assets – Inventory – Prepaid Expenses] / Current Liabilities

Types of ratios in accounting

The accounts receivable turnover ratio measures the average number of times that accounts receivables are created from credit sales and collected during a year.
The inventory turnover ratio measures the average number of times that new inventory is obtained and sold during a year..

Types of ratios in accounting

The ratios measure the amount of liquidity, namely cash and easily converted assets, for covering your debts, and provide a broad overview of your financial health.
These are the ratios to use when you want to know if you can pay your bills..

What are the 4 solvency ratios?

A solvency ratio examines a firm's ability to meet its long-term debts and obligations.
The main solvency ratios include the debt-to-assets ratio, the interest coverage ratio, the equity ratio, and the debt-to-equity (D/E) ratio..

What are the 5 types of ratio analysis?

Types of Ratio Analysis

What are the 5 types of ratios?

Financial ratios are grouped into the following categories:

What are the 6 categories of financial ratios?

The various kinds of financial ratios available may be broadly grouped into the following six silos, based on the sets of data they provide:

What are the financial ratios for corporate finance?

5 Essential Financial Ratios for Every Business.
The common financial ratios every business should track are 1) liquidity ratios 2) leverage ratios 3)efficiency ratio 4) profitability ratios and 5) market value ratios..

What is corporate finance ratio?

Corporate Finance Ratios are quantitative measures that are used to assess businesses.
These ratios are used by financial analysts, equity research analysts, investors, and asset managers to evaluate the overall financial health of businesses, with the end goal of making better investment decisions..

Why are accounting ratios important?

Analyzing accounting ratios is an important step in determining the financial health of a company.
It can often point out areas that are bringing the profitability of a company down and therefore need improvement..