Ratio Analysis
Financial statements help interpret a particular company’s performance. Ratio analysis helps compare financial performance among different companies. Additionally, looking at how ratios have changed over time can help reveal if a company is headed in the right direction and can enable you to spot trends.
Solvency ratios help indicate a company’s health and its risk of default.
Current Ratio
Debt to Equity Ratio
Liquidity Ratio
Quick Ratio
Profitability ratios help an analyst understand the drivers of company performance. Trends help predict future company performance.
Gross Profit Margin
Net Income Margin
SG&A Margin
Efficiency ratios indicate a company’s ability to use its assets and resources efficiently.
Collection Period (Days Sales Outstanding)
Inventory Days Outstanding
Payable Period (Days Payable)