Page 53 - Case Lab Case Analysis

Financial Analysis

Financial Analysis

The following ratios are useful when developing a financial

analysis. (See Ratio Analysis)

1.Profit ratios:

Gross profit margin, net profit margin, return on total

assets, net income, and return on stakeholders’ equity.

2. Liquidity ratios:

Current ratio, and quick ratio.

3. Activity ratios:

inventory turnover, cost of goods sold, day’s sales
outstanding, accounts receivable.

4. Leverage ratios:

Debt-to-assets ratio, debt-to-equity ratio, and times-

covered ratio.

5. Shareholder return ratios:

Total shareholder returns, price-earnings ratio, market-

to-book value, dividends yield, and market price per
share.

6. Analysis of cash flows is the most instrumental.