Top 15 List of Financial Ratios Formulas for Investors
No matter if you’re college going student or an investor, you must be aware of the importance of financial ratios formulas, which helps you in financial statements analysis and also beneficial to analyze the current financial position of any company or business. Financial ratios formulas are the combination of all small information in numbers, and then resulting after interpretation. Basically Financial statement analysis is the most useful arts which every investor should practice to achieve success. So here we are presenting you the Top 15 Financial Ratios Formulas List for Investors and Students.
Financial Ratios Formulas starts after you have all required data and information present on your hands. You must have company’s consolidated financial statements, which is the combination of three most important statements i.e. Income Statement, Balance Sheet and Cash Flow Statement. So let’s start your investment analysis and financial research process with Financial Ratios Formulas available below.
List of Financial Ratios Formulas
Financial Ratios Formulas is the combination of five most important ratios i.e. Price Ratios, Profitability Ratios, Liquidity Ratios, Debt Ratios, and Efficiency Ratios.
Price Ratios Formulas
1. Price-to-Earnings Ratio (P/E):
Required Data: Income Statement and Most Recent Share Price
The Formula: Price per Share / Earnings per Share = P/E Ratio
2. Price/Earnings To Growth (PEG):
Required Data: Income Statement and Most Recent Share Price
The Formula: (P/E Ratio) / Projected Annual Growth in Earnings per Share = PEG Ratio
3. Price/Earnings To Growth (PEG):
Required Data: Income Statement and Most Recent Share Price
The Formula: (P/E Ratio) / Projected Annual Growth in Earnings per Share = PEG Ratio
4. Price-to-Sales Ratio:
Required Data: Income Statement and Most Recent Share Price
The Formula: Price per Share / Annual Sales per Share = Price-to-Sales Ratio
5. Price-to-Book Ratio (P/B):
Required Data: Balance Sheet and Most Recent Share Price
The Formula: Price per Share / Book Value per Share = P/B Ratio
5. Dividend Yield:
Required Data: Income Statement and Most Recent Stock Price
The Formula: Dividend per Share / Price per Share = Dividend Yield
6. Dividend Payout Ratio:
Required Data: Income Statement
The Formula: Dividend / Net Income = Dividend Payout Ratio
Profitability Ratios Formulas
7. Return on Assets (ROA):
Required Data: Balance Sheet and Income Statement
The Formula: Net Income / Average Total Assets = Return on Assets
8. Return on Equity (ROE):
Required Data: Balance Sheet and Income Statement
The Formula: Net Income / Average Stockholder Equity = Return on Equity
9. Profit Margin:
Required Data: Income Statement
The Formula: Net Income / Sales = Profit Margin
Liquidity Ratios Formulas
10. Current Ratio:
Required Data: Balance Sheet
The Formula: Current Assets / Current Liabilities = Current Ratio
11. Quick Ratio:
Required Data: Balance Sheet
The Formula: (Current Assets – Inventory) / Current Liabilities = Quick Ratio
Debt Ratios Formulas
12. Debt to Equity Ratio:
Required Data: Balance Sheet
The Formula: Total Liabilities / Total Shareholder Equity = Debt to Equity Ratio
13. Interest Coverage Ratio:
Required Data: Income Statement
The Formula: EBIT / Interest Expense = Interest Coverage Ratio
Efficiency Ratios Formulas
14. Asset Turnover Ratio:
Required Data: Income Statement and Balance Sheet
The Formula: Sales / Average Total Assets = Asset Turnover Ratio
15. Inventory Turnover Ratio:
Required Data: Income Statement and Balance Sheet
The Formula: Costs of Goods Sold / Average Inventory = Inventory Turnover Ratio
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