5 Key Financial Ratios:
• Liquidity
• Leverage
• Efficiency
• Profitability
• Market value
I'll teach it to you in 2 minutes:
• Liquidity
• Leverage
• Efficiency
• Profitability
• Market value
I'll teach it to you in 2 minutes:
• Liquidity
Can a company repay its creditors in the short term?
Look at 3 kinds of ratios:
▪️Asset Ratio
▪️Earnings ratio
▪️Cash Flow ratio
Can a company repay its creditors in the short term?
Look at 3 kinds of ratios:
▪️Asset Ratio
▪️Earnings ratio
▪️Cash Flow ratio
• Leverage
Can a company pay its debt in the long term?
Look at 3 ratios:
▪️Debt-to-equity ratio
▪️ Equity ratio
▪️ Debt ratio
Can a company pay its debt in the long term?
Look at 3 ratios:
▪️Debt-to-equity ratio
▪️ Equity ratio
▪️ Debt ratio
• Efficiency
How efficient is the company running its operations?
Look at these ratios:
▪️Accounts Receivable Turnover Ratio
▪️Accounts Receivable Days
▪️Asset Turnover Ratio
▪️Inventory Turnover Ratio
▪️Inventory Turnover Days
How efficient is the company running its operations?
Look at these ratios:
▪️Accounts Receivable Turnover Ratio
▪️Accounts Receivable Days
▪️Asset Turnover Ratio
▪️Inventory Turnover Ratio
▪️Inventory Turnover Days
• Profitability
How good is management in capital allocation?
And how much money does the company generate?`
Look at these ratios:
▪️ROE
▪️ROA
▪️ROCE
▪️Gross margin
▪️Operating profit margin
▪️Net profit margin
How good is management in capital allocation?
And how much money does the company generate?`
Look at these ratios:
▪️ROE
▪️ROA
▪️ROCE
▪️Gross margin
▪️Operating profit margin
▪️Net profit margin
• Market value
Is the company valued attractively?
Look at these ratios:
▪️P/E Ratio
▪️EV/EBITDA
▪️EV/EBIT
▪️EV/Revenue
Is the company valued attractively?
Look at these ratios:
▪️P/E Ratio
▪️EV/EBITDA
▪️EV/EBIT
▪️EV/Revenue
That's it for today. The visuals were made by Yashika Vatsa.
If you liked this, you’ll our free Financial Analysis course.
It teaches you how to read Financial Statements like a professional.
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If you liked this, you’ll our free Financial Analysis course.
It teaches you how to read Financial Statements like a professional.
Grab it for free here: compounding-quality.ck.page
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