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Shareholder ratios Number of shares outstandin g Net income available to shareholders =Earnings per share Dividends paid to shareholders Dividends per share Number of shares outstanding = Dividends Dividend payout ratio = Ratios are used to make comparisons between different aspects of a company's performance or how the company stacks up within a particular industry or region. Earnings Per Share. A company’s current ratio can be compared with the past current ratio; this will help to determine if the current ratio is high or low at this period in time. They reveal very basic information such as whether you have accumulated too much debt, stockpiled too much inventory or are not collecting receivables fast enough. Net margin ratio: net profit margin is one of the most importance profitability ratio that could help entity to assess how well entity spend on operating costs and others related cost. Return on equity is derived by taking net income and dividing it by shareholder’s equity; it provides a return that management is realizing from the shareholder’s equity. Gross profit margin is also one of the importance profitability ratio that popularly use to assess how well entity generate income from product before considering operating cost. The receivable turnover ratio shows how many times the receivable was turned into cash during the period. This has been a guide to Financial Ratio Analysis. … This ratio assess the possible period that entity could run by using only current assets. Working capital equal to current assets less current liability. This financial ratio indicates whether or not working capital has been effectively utilized in making sales. Earnings per Share (EPS) When buying a stock, you participate in the future earnings (or risk of loss) … Economic value added (EVA) is basically assess how well the projects are added the value to shareholders and the company. If not, then entity might indicate as liquidity problem. The eighth type of financial ratio analysis is the Control Ratio. Accountancy has a lot of ratios, but if you want to use the information you need to go beyond learning how to calculate ratios. It is used to measure business profitability and its ability to repay the loan. The second category of ratios included in our list of financial ratios is the solvency ratio, which is also the most important financial ratio. This margin is different from gross profit margin because gross profit margin study only cost of goods sold (cost related to product or services). Whether you are a retailer, or you work with retailers, The Retail Owners Institute makes it easy for you to get a quick financial health assessment of any retail business.. From all the ratios available, The ROI has selected 6 Key Retail Ratios … The turnover ratio is also known as activity ratio. These ratios are popular for analyst working in the bank as well as investment company.eval(ez_write_tag([[336,280],'wikiaccounting_com-medrectangle-4','ezslot_0',104,'0','0'])); Auditors are also assess these ratio to assess entity going concern. The focus of these measurements is on the efficient use of resources to generate sales, as well as how well assets can be converted into cash. CFO is operating cash ﬂow under US GAAP or under IFRS, conditional to the fact that the company includes interest paid in operating activities. Interest Coverage Ratio use the interest expenses for the period compare to profit before interest and tax for the period. Payable turnover use to determine the rate the entity pay off its suppliers. This ratio is used to assess the ability that entity could generate profit from using net assets. Quick ratio remove certain current assets from its calculation. This ratio use cost of goods sold and averages inventories to assess the how effectively entity manage its inventories. Investors and creditors can use profitability ratios to judge a company’s return on investment based on … Performance Ratios Cash ﬂow to revenue Cash return on assets Cash return on equity Cash to income It assesses the entity financial leverages by using the direct relationship between current entity liability and entity’s equity. After-tax profit margin is a financial performance ratio calculated by dividing net income by net sales. Importance efficiency ratio especially for potential investors to review among others efficiency ratio especially manufacturing! Potential investors to review among others efficiency ratio especially for potential investors to review among others ratio! And list of 28 financial ratios are the common users of these are. Speed of operations and suggest improvement ratios measure the time required to proﬁts! 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