RATIO ANALYSIS

Question 1

LIQUIDITY RATIO

Answer 1

CURRENT RATIO
CA /CL

QUICK RATIO
CA-INV / CL

measure a company’s ability to meet short-term obligations

Question 2

Profitability Ratios

Answer 2

Net profit margin
Return on assets (ROA)
Return on equity (ROE)
Evaluate how effectively a company generates profit relative to its revenue, assets, or equity.

Question 3

Solvency Ratios

Answer 3

Debt-to-equity ratio

Interest coverage ratio,

Assess a company’s ability to meet long-term obligations.

Question 4

Market Value Ratios

Answer 4

Price-to-earnings (P/E)
Earnings per share (EPS)

Reflect investor perceptions of a company’s future growth and profitability. ​
These ratios influence stock prices and investor confidence.

Question 5

Cash Flow Ratios

Answer 5

Operating Cash Flow Ratio,

Question 6

ROE - Return on Equity

Answer 6

Net Income - Preferred Dividends / Average Common Equity

Question 7

DuPont ROA

Answer 7

Net Income / Net Sales
Multiplied by
Net Sales / Avg Total Assets