FINANCIAL RATIOS

Profitability Ratios:

Net Profit Margin (net profit/revenue) - Percentage of revenue left after all expenses have been deducted from the sale.

Return on Assets (net income/total assets) - Indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient a company's management is at using its assets to generate earnings.

Return on Equity (net income/equity) - Measures the ability of a firm to generate profits from its shareholders' investments.

Liquidity Ratios: 

Current Ratio (current assets/current liabilities) - Measures whether a firm has enough resources to meet its short-term obligations.

Quick Ratio (current assets-inventory/current liabilities) - Measure of how well a company can meet its short-term financial liabilities.

Debt Ratios:

Debt Ratio (total liabilities/total assets) - The proportion of a company’s assets that are financed by debt.

Debt-to-Equity Ratio (total liabilities/total shareholder's equity) - Measure of the degree to which a company is financing its operations through debt versus wholly-owned funds.