Ratio and Percent Analysis
Published on Nov 24, 2015
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MORE DECKS TO EXPLORE
PRESENTATION OUTLINE
profitability percentages
evaluates a company's ability to earn profit - compare results from previous years, companies, etc.
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current ratio or working captial ratio
total current assets/total current liability
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how capable is a business to pay its debts?
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investors want to see high percent
- 2.5 - very good
- 2.0 - good
- 1.5 - fair
- 1.0 - poor
- less than 1.0 - bad
quick ratio (acid-test ratio)
total assets - inventory/prepaid expense / total liability
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includes assets that can be converted into cash quickly
measures ability to pay debt in a short amount of time (2 months) - less than 1 isn't great, but common
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investors want to see higher percent
in shareholders' money - more invested in success of the corp.
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money that remains after are deducted from sales
make sure to interpret as a ratio...
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how many times a business can sell and replace inventory in one year
compare with previous years, if it increases - nice!
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earnings per share (EPS)
net income / number of common shares outstanding
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eps measures performance of corp. and executives
try to see how stable it is, compare with other companies
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tells us how outside investors feel about the company
high p/e ratio has higher confidence for long term growth
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