> Financial Ratios

Enterprise Value - Determining the Takeover Value of a Company
Enterprise value is the takeover value of a company. Enterprise value is calculated by adding a corporation’s market capitalization, preferred stock, and outstanding debt together and then subtracting out the cash and cash equivalents

Return on Equity - The DuPont Model
Return on equity, or ROE, is made up of three important components under the DuPont model. Discover how to calculate return on equity using these three components in this article.

Asset Turnover Ratio - Financial Ratio #1
The asset turnover financial ratio calculates the total sales for each dollar of asset a company owns. It measures a company's efficiency in using its assets.

Current Ratio - Financial Ratio #2
The current ratio is one of the most famous of all financial ratios. It serves as a test of a company's financial strength and relative efficiency [i.e., does a company have too much cash on hand or not enough?]

Debt to Equity Ratio - Financial Ratio #3
The debt to equity financial ratio is a measure of the total debt a company owes compared to the equity of the shareholders. It tells you just how much of the capitalization is the owners vs. the creditors.

Gross Profit Margin Ratio - Financial Ratio #4
This financial ratio tends to remain stable over time. Significant fluctuations can be a sign of fraud or financial irregularities.

Gross Profit - Financial Ratio #5
Gross profit is the the total revenue subtracted by the cost of generating that revenue. An investor must know a company's gross profit in order to calculate a financial ratio known as the gross profit margin.

Interest Coverage Ratio - Financial Ratio #6
The interest coverage ratio has huge implications for bond and preferred stock investors in particular. This financial ratio tells the investor the number of times the earnings before interest and taxes can pay, or "cover", the interest payment the company makes on its debt.

Inventory Turn Ratio - Financial Ratio #7
This financial ratio tells an investor how many times a business turns its inventory over a period of time. It allows you to see if a company has too many of its assets tied up in inventory and is heading for financial trouble.

Net Profit Margin Financial Ratio - Financial Ratio #8
The net profit margin tells you how much money a company makes for every $1 in revenue.

Operating Profit Margin Ratio - Financial Ratio #9
The operating profit margin is a financial ratio that measures the efficiency of management.

Quick Test - Financial Ratio #10
This financial ratio is known as the quick test, acid test, or liquidity test; all mean the same thing. Of all the financial ratios, it is the most difficult and stringent measure of a company's strength and liquidity.

Receivable Turn Ratio - Financial Ratio #11
The receivable turns financial ratio tells you how many times a company or business collects its accounts receivable in a period of time.

Return on Assets Ratio - Financial Ratio #12
Return on assets financial ratio reveals how asset intensive a business is. There are two ways to calculate ROA.

Return on Equity - ROE Financial Ratio - Financial Ratio #13
The return on equity is my favorite financial ratio. It reveals how much profit a company earned in comparison to the total amount of shareholder equity on the balance sheet. For those of you interested in long-term investing with rich rewards, companies that have high return on equity ratios can provide the biggest payoff. Read and print this article!

Working Capital Per Dollar of Sales - Financial Ratio #14
This financial ratio tells an investor the amount of working capital a company should keep on hand.

Working Capital - Financial Ratio #15
Working capital is perhaps more important than many of the financial ratios. It can be calculated by subtracting current liabilities from the current assets.