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Sunday, April 17, 2011

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Essentials for Ratio Analysis 2011

Ratio analysis is the calculation and comparison of ratios which are derived from theinformation in a company's financial statements. Financial ratios are usually expressedas a percent or as times per period.

a) Liquidity Ratios


Liquidity ratios measure a firm’s ability to meet its current obligations.

These include:
• Current Ratio
• Acid Test Ratio
• Working capital
b) Leverage Ratios


Leverage ratios measure the degree of protection of suppliers of long term funds.

These include:

• Times Interest Earned
• Debt Ratio
• Debt / Equity Ratio
• Debt to Tangible Net worth Ratio
• Total Capitalization Ratio

c) Profitability Ratios
Profitability ratios measure the earning ability of a firm.

These include:

  1. Net Profit Margin
  2. Return on Assets
  3. DuPont Return on Assets
  4. Operating Income Margin
  5. Return on Operating Assets
  6. Return on Total Equity
  7. Gross Profit Margin
d) Activity Ratios


Activity ratios measure a firm's ability to convert different accounts within their
balance sheets into cash or sales.

These include:

• Total Assets Turnover
• Fixed Assets Turnover

e) Market Ratios


Market ratios are commonly used by the investors to assess the performance of a

business as an investment and also the cost of issuing stock.

These include:

• Dividend per share
• Earning per Share
• Price/Earning Ratio

DEAR STUDENTS
FIN619-INTRENSHIP REPORTS, ALL ABOVE RATION ARE AVAILABLE ON BANKS AND OTHER PAKISTANI COMPANIES ACCORDING TO VIRTUAL UNIVERSITY FORMAT

VIRTUAL UNIVERSITY OF PAKISTAN
FORMAT OF THE INTERNSHIP REPORT

Masters of Business Administration (Finance)

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Author: Mohammad
Mohammad is the founder of STC Network which offers Web Services and Online Business Solutions to clients around the globe. Read More →

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