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Profitability Ratios
Operating margin takes into account the costs of producing the product or services that are
unrelated to the direct production of the product or services, such as overhead and administrative
expenses. It is calculated by dividing your operating profit (OP) by your net sales (NS) and
multiplying the quotient by 100:
OM = OP / NS * 100
Gross Margin
Gross margin tells you about the profitability of your goods and services. It tells you how much it
costs you to produce the product. It is calculated by dividing your gross profit (GP) by your net sales
(NS) and multiplying the quotient by 100:
GM = GP / NS * 100
The Cash Flow Margin is a measure of how efficiently a company converts its
sales dollars to cash. Since expenses and purchases of assets are paid from
cash, this is an extremely useful and important profitability ratio
Return on Assets
Return on Assets measures how effectively the company produces income from its assets. You
calculate it by dividing net income (NI) for the current year by the value of all the company's assets
(A) and multiplying the quotient by 100:
Return on Equity
Return on equity measures how much a company makes for each dollar that investors put into it.
You calculate it by taking the net income earned (NI) by the amount of money invested by
shareholders (SI) and multiplying the quotient by 100:
ROE = NI / SI * 100
14.00
9.45
9.62
12.50
12.50
8.19
8.19
51.41
37.66
37.66
280.43
280.43
51.41
13.97
9.02
9.17
13.64
13.64
8.76
8.76
48.57
42.31
43.05
250.70
250.70
48.57
15.46
10.77
10.81
13.56
13.56
10.04
10.04
49.83
55.43
49.27
214.83
214.83
49.83
Liquidity Ratios
CURRENT RATIO
Current Ratio= Current Assets/Current Liabilities
Current Assets=Current investments+ Inventories+ Unbilled revenues+ Trade receivables+
Cash& Bank balances+ Short term loans and Advances+ Other current assets
Current Liabilities=Short term borrowings+ Trade payables+ Other current liabilities+ Short
term provisions
13.40
11.26
11.33
11.36
11.36
9.89
9.89
52.13
65.21
61.34
148.03
148.03
52.13
1
1
QUICK RATIO
Quick Ratio= (Current Assets-Inventories)/Current Liabilities
Quick ratio or acid test ratio is a better ratio to evaluate liquidity since it does not take
inventories into account. This is done so because inventories are the least liquid of all current
assets since it takes time for realisation into cash and its value also has a tendency to
fluctuate.
Current Ratio
Quick Ratio
Current Ratio
Quick Ratio
Debt Equity Ratio
Long Term Debt Equity Ratio
0.65
0.47
---
0.67
0.52
0.06
0.06
0.42
0.28
0.23
0.23
Leverage Ratios
A leverage ratio is meant to evaluate a companys debt levels. The most common leverage
ratios are the debt ratio and the debt-to-equity ratio.
A debt ratio is simply a company's total debt divided by its total assets. The formula is:
Debt Ratio = Total Debt / Total Assets
The debt-to-equity ratio is a measure of the relationship between the capital contributed by
creditors and the capital contributed by owners. It also shows the extent to which
shareholders' equity can fulfill a company's obligations to creditors in the event of a liquidation.
Here is the formula for the debt-to-equity ratio:
Debt-to-Equity Ratio = Total Debt/Total Equity
0.24
0.15
0.50
0.50
0.06
0.23
0.50
0.01
Total debt/equity
0.06
0.23
0.50
0.01
4.49
4.85
4.85
4.28
Turnover Ratios
Turnover ratios are also known as activity or efficiency ratios. The total fund raised by the
company are invested in acquiring various assets for its operations. The assets are acquired to
generate the sales revenue and the position of profit depends upon the value of sales. Turnover
ratios establish the relationship of sales with various assets. Turnover ratios are expressed in
integers or times rather than as a percentage or proportion. The turnover ratios are mostly
computed to measure the efficiency.
Formula
The asset turnover ratio is calculated by dividing net sales by average total assets.
A companys investment turnover ratio measures its ability to generate sales revenue using
the money it has invested in the company. The ratio equals sales divided by the sum of longterm liabilities plus stockholders equity. Stockholders equity is the amount of money
stockholders have invested in a company. The amount of long-term liabilities is the amount
of money debtholders have invested in the company - See more at:
http://wiki.fool.com/How_to_Measure_Investment_Turnover_Ratio#sthash.eYycY4j2.dpuf
37.75
31.88
37.75
7.40
4.81
37.33
50.72
37.33
7.32
5.76
40.84
117.09
40.84
4.05
4.91
43.88
162.08
43.88
3.70
4.68
4.63
4.49
4.85
4.85