Ratio List

Profitability, Working Capital/Liquidity, Financial Structure/Investors Criteria, Corporate ratios
ProfitabilityWhere to look/how to calculateUsed to/Issue
1. Return on Capital Employed (rate of return)ROTA (PBIT/total assets x 100)
RONA (PBIT/(total assets – current liabilities) x 100)
2. Return on SalesROS (PBIT/sales x 100)
3. Sales Generation (asset turnover)SG (sales/total assets)Increase if ROS falls
SG (sales/(total assets – current liabilities))
Working Capital/LiquidityWhere to look/how to calculateUsed to/Issue
4. Current Ratio(Current Assets/(Creditors (amount falling due within one year)))
5. Liquid Ratio(Liquid assets/(Creditors (amount falling due within one year)))
6. Stock Days(Stocks/(Average daily cost of sales (PL: sales cost/365))
7. Debtors Days(Trade Debtors + Customer advances / Average daily sales)
8. Creditor Days(Trade Creditors/Average daily cost of sales)
Financial Structure/ Investors CriteriaWhere to look/how to calculateUsed to/Issue
1. Gearing (Leverage in US)(Debt/Shareholders fund x 100)Purpose is to identify financial risk in a certain capital structure. The higher borrowings the higher the risk. >50% risky <20% conservative
Affects cost of capital but not cash. Tax relief on interest not on dividend. Low RONA + high Gearing = good ROE.
2. Interest Cover(PBIT/Interest payable)
3. Return on EquityROE (Profit available for distribution to shareholders/Shareholders funds x 100)Important to balance shareholders fund and outside borrowing (RONA & Gearing balance).
4. Earnings Per ShareEPS (P&L account)
5. Dividend Per Share(note to accounts)
6. Dividend Cover(Profit available for distribution to shareholders/Dividends)
7. Dividend Yield“Gross” (Dividends per share/share price)
8. P/E ratio(Share price/Earnings per share)Indicates how many times earnings investors are willing to pay for shares
High – indicates that market expects earnings to rise.
Corporate ratiosWhere to look/how to calculateUsed to/Issue
1. Market/book(market value/book value of assets)Indicates how much the market values the company compared to the assets
High – added value due to historic performance (successful strategies) and future expectations – puts pressure on future performance