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24 Cards in this Set
- Front
- Back
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Gross Margin |
Gross Profit/Revenues (revenues-COGS)/revenues Measures the percentage of sales revenue a company keeps after it covers all direct costs associated with running the business Income Statement Profitability ratio |
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Operating Margin |
Operating Revenues/Revenues (Revenues - COGS - OpEx)/Revenues (Gross Profit - OpEx)/Revenues Measures how much profit a company makes on a dollar of sales after paying for variable costs of production Income Statement Profitability ratio |
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Net Profit Margin |
Net Income/Revenues (Revenues-Expenses)/Revenues measures how much net income or profit is generated as a percentage of revenue Income Statement Profitability ratio |
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Tax Ratio |
Tax Expense/Pre-Tax Income Indicator of tax efficiency. Lower numbers indicate more efficient tax management. Higher numbers indicates idle investment of revenue, since investment income is taxed at a higher rate than operating income Income Statement ratio Tax efficiency ratio |
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Interest Coverage Ratio |
Interest cost/EBT Indicates company's ability to handle its outstanding debt Lower numbers indicate more ability to cover outstanding debt Income Statement ratio Debt solvency ratio |
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Total Asset Turnover ratio |
Revenues/Total Assets Indicates how efficiently assets are being used to generate revenues. How much revenue is being generated for each dollar of asset. Higher is better. Can be modified to assess Net Assets, Current Assets, or Non-Current Assets. Income Statement + Balance Sheet ratio Operating efficiency ratio |
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Net Asset Turnover ratio |
Revenues/(Total Assets-Total Liabilities) How much revenue is being generated for each dollar of net asset. Higher is better. Can be modified to assess Current Assets, or Non-Current Assets. Income Statement + Balance Sheet ratio Operating efficiency ratio |
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Current Ratio |
Current Assets/Current Expenses Measures a company's ability to pay current, or short-term, liabilities (debts and payables) with its current, or short-term, assets (typical target of >2) Balance sheet ratio Liquidity ratio |
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Quick Ratio |
(Current Assets-Inventory)/ Current Expenses Conservative measure of a company's ability to pay current, or short-term, liabilities (debts and payables) with its most liquid assets Balance sheet ratio Liquidity ratio |
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Inventory Turnover Ratio |
COGS/Inventory Measure of how well a company is turning its inventory into sales Low ratio indicates insufficient inventory or is slow to sell inventory High ratio indicates rapid sales and good inventory management Income Statement + Balance sheet ratio Operating efficiency ratio |
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Inventory Days |
Inventory * (days in period)/COGS Measures the average number of days inventory is on hand High ratio indicates insufficient inventory or slow sales of inventory Low ratio indicates rapid sales and good inventory management Income Statement + Balance sheet ratio Operating efficiency ratio |
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Receivables Turnover |
Sales/AR Measures how many times AR turns over in a period A higher ratio indicates quicker collection on AR Income Statement + Balance sheet ratio Operating efficiency ratio |
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Receivable Days |
AR * (days in period)/Sales Measures the average number of days it takes to collect on AR
A higher ratio indicates slower collection on AR Income Statement + Balance sheet ratio Operating efficiency ratio |
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Payables Turnover |
Cost of Sales/AP How many times AP turns over in a period A lower ratio indicates slower payment of bills Income Statement + Balance sheet ratio Operating efficiency ratio |
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Payables Days |
AP * (days in period) /COGS How many days does it take a company to pay its bills A higher ratio indicates slower payment of bills Income Statement + Balance sheet ratio Operating efficiency ratio |
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Working Capital Funding Gap |
The length of time it takes to convert the total net working capital (current assets - current liabilities) into cash Manage this cycle by selling inventory quickly, collecting revenue from customers quickly, and paying bills slowly to optimize cash flow |
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PP&E Turnover |
Revenue/PP&E How much revenue is generated per dollar of PP&E Can be effected in the near term by large capital expenditures on PP&E Income Statement + Balance sheet ratio Operating efficiency ratio |
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Working Capital |
Current Assets - Current Liabilities Calculates whether a company has enough liquid assets to pay its bills that will be due within a year. Measures liquidity, operational efficiency, and short-term financial health. If less than one, working capital is negative. Positive working capital indicates that a company can fund its current operations and invest in future activities and growth. High working capital might indicate that the business has too much inventory or is not investing its excess cash. |
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Debt to Equity Ratio |
Total Debt/Total Shareholders Equity Calculates the weight of total debt and financial liabilities against shareholder’s equity. Used in conjunction with the Total Liabilities to Equity ratio to determine the impact operational liabilities have on the funding of the business. Leverage ratio |
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Debt to Tangible Net Worth (TNW) |
Total Debt/(Total Equity-Intangible Assets) Measures how many physical assets a company has. Represents the proceeds that could be available if the company were to be quickly sold. Leverage ratio |
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Total Liabilities to Equity ratio |
Total Liabilities/Shareholders Equity Used in conjunction with the debt to equity ratio to determine the impact operational liabilities have on the funding of the business. Leverage ratio |
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Total Assets to Equity |
Total Assets/Total Equity Shows the relationship of total assets to the portion owned by shareholders. It is used to measure the leverage relative to assets. Leverage ratio |
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Debt to EBITA ratio |
Total Debt/EBITA Measures the amount of leverage relative to EBITDA. This ratio reflects the cash available to pay back the debt. Leverage ratio |
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Return on Equity |
Net Profit Margin * Total Asset Turnover * Financial Leverage Net Income Sales Total Assets Net Income ------------------- * ------------------ * ------------------- = -------------------- Sales Total Assets Equity Equity |
