Ratios made simple: a beginner's guide to the key financial ratios

About the Author

Introduction

1. Profitability Ratios

1.1. Earnings Per Share (EPS)

1.2. Price-to-Earnings Ratio (P/E)

1.3. Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortisation Ratio (EV/EBITDA)

1.4. Price-to-Sales Ratio (PSR)

2. Investment Ratios

2.1. Dividend Yield

2.2. Total Return

2.3. Return On Capital Employed (ROCE)

2.4. Return On Equity (ROE)

2.5. Premium to Asset Value (PAV)

2.6. Internal Rate of Return (IRR)

2.7. Return On Assets (ROA)

2.8. Dividend Payout Ratio

3. Dividend Cover

3.1. Dividend Cover

4. Margins

4.1. Gross Margin and Net Margin

4.2. Overheads to Turnover

5. Gearing

5.1. Gearing Ratio

5.2. Interest Cover

6. Solvency Ratios

6.1. Acid Test

6.2. Current Ratio

6.3. Cash Burn

6.4. Defensive Interval

6.5. Fixed Charges Cover

7. Efficiency Ratios

7.1. Stock Turn

7.2. Price-to-Book Value (PBV)

7.3. Overtrading and Undertrading

7.4. Item Comparison

8. Policy Ratios

8.1. Creditor Period

8.2. Debtor Period

8.3. Fixed Asset Spending Ratio

9. Volatility

9.1. Volatility Ratio

9.2. Standard Deviation

Appendix

Index