Page 88 - The Case Lab Book
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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.
