Overview

Ratio analysis is the comparison of line items in the financial statements of a business. Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of operations, and profitability.

 

Corporate finance ratios are quantitative measures that are used to assess businesses. These ratios are used by financial analysts, equity research analysts, investors, and asset managers to evaluate the overall financial health of businesses, with the end goal of making better investment decisions. Corporate finance ratios are also heavily used by financial managers and C-suite officers to get a better understanding of how their businesses are performing.

 

Different types of Ratios:

  • Profitability Ratio
    Return on Equity
    Return on Assets
    Return on Capital Employed
    Gross Margin Ratio
    Operating Profit Margin
    Net Profit Margin
  • Leverage Ratios
    Debt-to-Equity Ratio
    Equity Ratio
    Debt Ratio
  • Efficiency Ratios
    Accounts Receivable Turnover Ratio
    Accounts Receivable Days
    Asset Turnover Ratio
    Inventory Turnover Ratio
    Inventory Turnover Days
  • Liquidity Ratios
    Current Ratio
    Quick Ratio
    Cash Ratio
    Defensive Interval Ratio
  • Times Interest Earned Ratio
  • Times Interest Earned (Cash Basis) Ratio
    CAPEX to Operating Cash Ratio
    Operating Cash Flow Ratio
  • Price-to-Earnings (P/E) Ratio
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