Brian Feroldi on LinkedIn: Ratios every investor should know: 1️⃣ Liquidity and efficiency ▪️Quick:… | 25 comments (2024)

Ratios every investor should know:1️⃣ Liquidity and efficiency▪️Quick: immediate short-term debt-paying ability▪️Current ratio: short-term debt-paying ability▪️Accounts receivable turnover: Efficiency of collection▪️Inventory turnover: Efficiency of inventory management▪️Days' sales uncollected: Liquidity of receivables▪️Days' sales in Inventory: Liquidity of inventory▪️Total asset turnover: Efficiency of assets in producing sales2️⃣ Solvency▪️Debt ratio: Creditor financing and leverage▪️Equity ratio: Owner financing▪️Debt-to-equity ratio: Debt versus equity financing▪️Times interest earned: Protection in meeting interest payments3️⃣ Profitability▪️Gross margin: Gross margin in each sales dollar▪️Profit margin: Net income in each sales dollar▪️Return on Assets: Overall profitability of assets▪️Return on Equity: Profitability of owner investments▪️Book value per common share: Liquidation at reported amounts▪️Earnings per share: Net income per common share4️⃣ Market Prospects▪️ Price-earnings ratio: Market value relative to earnings▪️ Dividend yield: Cash returns per common shareWhat are your favorite investing ratios to track?***P.S. Want to master the basics of financial analysis (for free)?I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English.Get started here (It's free) →https://lnkd.in/eKbRV7g6If you enjoyed this post, please repost ♻️ to share with your audience.

Ratios that everyone should know:1️⃣ Liquidity and efficiency▪️Current ratio: short-term debt-paying ability▪️Acid-test ratio: immediate short-term debt-paying ability▪️Accounts receivable turnover: Efficiency of collection▪️Inventory turnover: Efficiency of inventory management▪️Days' sales uncollected: Liquidity of receivables▪️Days' sales in Inventory: Liquidity of inventory▪️Total asset turnover: Efficiency of assets in producing sales2️⃣ Solvency▪️Debt ratio: Creditor financing and leverage▪️Equity ratio: Owner financing▪️Debt-to-equity ratio: Debt versus equity financing▪️Times interest earned: Protection in meeting interest payments3️⃣ Profitability ▪️Profit margin ratio: Net income in each sales dollar▪️Gross margin ratio: Gross margin in each sales dollar▪️Return on total assets: Overall profitability of assets▪️Return on common shareholders' equity: Profitability of owner investment▪️Book value per common share: Liquidation at reported amounts▪️Basic earnings per share: Net income per common share4️⃣ Market Prospects▪️ Price-earnings ratio: Market value relative to earnings▪️ Dividend yield: Cash returns per common share.

2

Financial Ratios Handbook 👇This is a compilation that includes...✳️ Profitability RatioA. ReturnReturn on Equity Return on Assets Return on Capital Employed B. MarginGross Margin Ratio Operating Profit Margin Net Profit Margin✳️ Leverage RatioDebt-to-Equity Ratio Equity Ratio Debt Ratio ✳️ Efficiency RatioAccounts Receivable Turnover Ratio Accounts Receivable Days Asset Turnover Ratio Inventory Turnover Ratio Inventory Turnover Days✳️ Liquidity RatioA. AssetCurrent Ratio Quick Ratio Cash Ratio Defensive Interval RatioB. Earnings Times Interest Earned Ratio C. Cash Flow Times Interest Earned (Cash Basis) Ratio CAPEX to Operating Cash Ratio Operating Cash Flow Ratio✳️ Valuation RatioA. Price Price-to-Earnings RatioB. Enterprise ValueEV/EBITDA Ratio EV/EBIT Ratio EV/Revenue Ratio ——————————————————————————Follow me (Yashika Vatsa) for upcoming post.Parth Verma𝗟𝗶𝗸𝗲 👍 and 𝗥𝗲𝗽𝗼𝘀𝘁 🔁 to spread the words.#linkedin#finance#investing

835

90 Comments

Ratio analysis is a valuable tool used by analysts, investors, and stakeholders to assess a company's financial performance and make informed decisions. The five key categories in ratio analysis and each provide insights into different aspects of a company's financial health.

A quick review of some Finance 101

Financial Ratios Handbook👇This is a compilation that includes...✳️ Profitability RatioA. ReturnReturn on Equity Return on Assets Return on Capital Employed B. MarginGross Margin Ratio Operating Profit Margin Net Profit Margin✳️ Leverage RatioDebt-to-Equity Ratio Equity Ratio Debt Ratio ✳️ Efficiency RatioAccounts Receivable Turnover Ratio Accounts Receivable Days Asset Turnover Ratio Inventory Turnover Ratio Inventory Turnover Days✳️ Liquidity RatioA. AssetCurrent Ratio Quick Ratio Cash Ratio Defensive Interval RatioB. Earnings Times Interest Earned Ratio C. Cash Flow Times Interest Earned (Cash Basis) Ratio CAPEX to Operating Cash Ratio Operating Cash Flow Ratio✳️ Valuation RatioA. Price Price-to-Earnings RatioB. Enterprise ValueEV/EBITDA Ratio EV/EBIT Ratio EV/Revenue Ratio Source: Yashika Vatsa📚If you enjoyed this piece, please hit the “Like” button. Thank you for your support!__💡Download 50 more investment insights like this one here: https://lnkd.in/epJNgDvz

1,668

38 Comments

🔍 Understanding #Financial_Ratios: Unlocking Insights for Businesses and Stakeholders 🔍Financial ratios are like the pulse of a business, revealing its health and performance to stakeholders. Here’s why they matter:1️⃣ #Liquidity_Ratios: Gauge a company’s ability to meet short-term obligations. A high ratio indicates robust liquidity, crucial for smooth operations and managing uncertainties.2️⃣ #Profitability_Ratios: Showcase a company’s ability to generate profits from its operations. Analyzing these ratios helps stakeholders assess the efficiency and effectiveness of business strategies.3️⃣ #Debt-to-Equity_Ratio: Measures a company’s financial leverage and risk. High ratios could signal excessive debt burden, impacting future growth potential and shareholder returns.4️⃣ #Return_on_Investment (ROI): Evaluates the efficiency of capital investments. It’s a key metric for investors, indicating how effectively their investments are being utilized to generate returns.5️⃣ #Asset_Turnover_Ratio: Reflects how efficiently a company utilizes its assets to generate revenue. Higher turnover ratios typically indicate better asset management and operational efficiency.By understanding and analyzing these ratios, businesses can make informed decisions, investors can assess risks and potential returns, and stakeholders can gain insights into the overall financial health of the organization. Stay tuned for more insights on mastering financial ratios! 💼💡 #FinancialAnalysis #BusinessInsights #InvestmentStrategiesPieter Slegers shared a very important PDF File that reviews that topic in a very handsome way.

Here's Financial Ratio Handbook

2

Financial Ratios Handbook 👇This is a compilation that includes...✳️ Profitability RatioA. ReturnReturn on Equity Return on Assets Return on Capital Employed B. MarginGross Margin Ratio Operating Profit Margin Net Profit Margin✳️ Leverage RatioDebt-to-Equity Ratio Equity Ratio Debt Ratio ✳️ Efficiency RatioAccounts Receivable Turnover Ratio Accounts Receivable Days Asset Turnover Ratio Inventory Turnover Ratio Inventory Turnover Days✳️ Liquidity RatioA. AssetCurrent Ratio Quick Ratio Cash Ratio Defensive Interval RatioB. Earnings Times Interest Earned Ratio C. Cash Flow Times Interest Earned (Cash Basis) Ratio CAPEX to Operating Cash Ratio Operating Cash Flow Ratio✳️ Valuation RatioA. Price Price-to-Earnings RatioB. Enterprise ValueEV/EBITDA Ratio EV/EBIT Ratio EV/Revenue Ratio

Financial Ratios Handbook👇This is a compilation that includes...✳️ Profitability RatioA. ReturnReturn on EquityReturn on AssetsReturn on Capital EmployedB. MarginGross Margin RatioOperating Profit MarginNet Profit Margin✳️ Leverage RatioDebt-to-Equity RatioEquity RatioDebt Ratio✳️ Efficiency RatioAccounts Receivable Turnover RatioAccounts Receivable DaysAsset Turnover RatioInventory Turnover RatioInventory Turnover Days✳️ Liquidity RatioA. AssetCurrent RatioQuick RatioCash RatioDefensive Interval RatioB. EarningsTimes Interest Earned RatioC. Cash FlowTimes Interest Earned (Cash Basis) RatioCAPEX to Operating Cash RatioOperating Cash Flow Ratio✳️ Valuation RatioA. PricePrice-to-Earnings RatioB. Enterprise ValueEV/EBITDA RatioEV/EBIT RatioEV/Revenue Ratio

17