Ratios - Profitability and Equity Flashcards Preview

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Flashcards in Ratios - Profitability and Equity Deck (13):
1

What are profitability Ratios used for?

These measure aspects of a firm's operating (income/loss) results on a relative basis

2

What is the Profit Margin Ratio?

Net Income/Net sales

Measures net profitability on sales

3

What is the return on total assets ratio?

(Net Income + (addback) Interest Expense (net of tax effect))/Average Total Assets

Measures rate of return on total assets and indicates the efficiency with which invested assets are used

4

What is the return on Owners' Equity Ratio?

Net Income/Average Stockholders' Equity (Beginning +Ending/2)

Measures rate of return (earnings) on common stockholders' investment

5

What is the Earnings Per Share (EPS) ratio?

(Net Income-Preferred Dividends (obligation for the period only))/Weighted Average number of shares outstanding

Measures Income earned per (Average) share of common stock. Indicates ability to pay dividends to common shareholders

6

What is the Price-Earnings Ratio (P/E Ratio)?

Market Price for a common share/Earnings per (common) share (EPS)

Measures the price of a share of common stock relative to its latest earnings per share. Indicates a measure of how the market values the stock, especially when compares with other stocks.

7

What are the common stock dividend payout ratios?

Total Basis=Cash Dividends to common shareholders/Net income to common shareholder

Per Share Basis=Cash dividends per common share/Earnings per common share

measures the extent (percent) of earnings distributed to common shareholders

8

What is the common stock yield ratio?

Dividend per common share/Market price per Common Share

Measures the rate of return (yield) per share of common stock

9

What is the Debt to Equity Ratio?

Total Liabilities/Total Shareholders' Equity

Measure relative amounts of assets provided by creditors and shareholders

10

What is the Owners' Equity Ratio?

Shareholders Equity/Total Assets

Measures the proportion of assets provided by shareholders

11

What is the Debt Ratio?

Total Liabilities/Total Assets

Measures the proportion of assets provided by creditors. Indicates the extent of leverage in funding the equity

12

What is the Book Value per common stock ratio?

Common Shareholders' Equity/Number of outstanding common shares

Measures the per share amount of common shareholders' claim to assets

13

What is the Book Value per preferred share ratio?

Preferred Shareholders' Equity(Including Dividends in arrears)/Number of Outstanding Preferred Stocks

Measures the per share amount of preferred shareholders' claim to assets

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