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    Accounting Ratios: Earnings Per Share (EPS)

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    Accounting ratios assist in interpreting a business's financial performance by providing information on profitability, solvency, ability to meet liabilities, and viability. Ratios are categorized as profitability, capital market, leverage, liquidity, and asset/inventory management ratios. They measure elements such as return on assets, debt levels, current ratios, and more to analyze a business's health for stakeholders like shareholders, investors, and creditors.

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    Accounting Ratios: Earnings Per Share (EPS)

    Uploaded by

    guptapriya222
    23 views4 pages
    Accounting ratios assist in interpreting a business's financial performance by providing information on profitability, solvency, ability to meet liabilities, and viability. Ratios are categorized as profitability, capital market, leverage, liquidity, and asset/inventory management ratios. They measure elements such as return on assets, debt levels, current ratios, and more to analyze a business's health for stakeholders like shareholders, investors, and creditors.

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    Accountancy

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    Accounting ratios assist in interpreting a business's financial performance by providing information on profitability, solvency, ability to meet liabilities, and viability. Ratios are categorized as profitability, capital market, leverage, liquidity, and asset/inventory management ratios. They measure elements such as return on assets, debt levels, current ratios, and more to analyze a business's health for stakeholders like shareholders, investors, and creditors.

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    23 views4 pages

    Accounting Ratios: Earnings Per Share (EPS)

    Uploaded by

    guptapriya222
    Accounting ratios assist in interpreting a business's financial performance by providing information on profitability, solvency, ability to meet liabilities, and viability. Ratios are categorized as profitability, capital market, leverage, liquidity, and asset/inventory management ratios. They measure elements such as return on assets, debt levels, current ratios, and more to analyze a business's health for stakeholders like shareholders, investors, and creditors.

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    Accounting Ratios

    Accounting ratios assist in the interpretation of financial performance of an entity. Information such as business
    solvency, its profitability, the return on its assets, its ability to meet short-term and long-term liabilities et cetra, is vital
    in gauging a business' health and its commercial vialbility. Such information is vital for all the stakeholders, that is
    shareholders, potential investors, the management, creditors, guarantors and statutory/regulatory bodies.

    Financial statement analysis / accounting ratios can be divided in the following categories:
    (click on a category to see ratios under it along with their formulas)

     Profitability Ratios

     Capital Market Ratios

     Leverage / Gearing Ratios

     Liquidity Ratios

     Asset / Inventory Management

    Profitability Ratios

    Earnings Per Share (EPS)

    Earnings Per Share (EPS) =

    Net Income / Weighted Average Number of Common Shares Outstanding

    Gross Profit Ratio

    Gross Profit Ratio = Gross Profit  x  100 / Sales

    Where Gross Profit = sales - direct costs

    Net Profit Ratio

    Net Profit Ratio = Net Profit  x  100 / Sales

    Return on Assets

    Return on Assets = Net Income / Average Total Assets

    Where Total Assets =


    (Beginning Total Assets + Ending Total Assets) / 2
    Return on Equity (ROE)

    Return on Equity (ROE) = Net Income / Average Stockholders´ Equity

    Where Average Stockholders´ Equity = (Beginning Stockholders´ Equity + Ending Stockholders´ Equity) / 2

    Capital Market Ratios

    Dividend Cover

    Dividend Cover = Earnings Available for Common Shareholders / Dividends Paid

    Dividend Cover

    Dividend Cover = Earnings Available for Common Shareholders / Dividends Paid

    Dividend Yield

    Dividend Yield = Annual Dividends Per Common Share / Market Price Per Common Share

    Historic Price Earnings (HPE) Ratio

    Historic Price Earnings (HPE) Ratio = Current Market Price of Common Share / Last Published Earnings Per Share

    Market to Book Ratio

    Market to Book Ratio = Market Price Per Common Share / Book Value of Equity Per Common Share

    Price Earnings (PE) Ratio

    Price Earnings (PE) Ratio = Market Price of Common Share / Earnings Per Share

    Prospective Price Earnings (PPE) Ratio

    Prospective Price Earnings (PPE) Ratio = Current Market Price of Common Share / Current Estimate of Earnings Per
    Share

    Leverage / Gearing Ratios

    Debt to Assets Ratio

    Debt to Assets Ratio = Total Liabilities / Total Assets


    Debt to Equity Ratio

    Debt to Equity Ratio = Total Liabilities / Equity

    Liquidity Ratios

    Borrowing Ratio

    Borrowing Ratio = Total Borrowings (Short-term and Long-term) / Total Equity

    Current Ratio

    Current Ratio = Current Assets / Current Liabilities

    Net Working Capital Ratio

    Net Working Capital Ratio = Net Working Capital / Total Assets

    Where Net Working Capital = Current Assets - Current Liabilities

    Net Working Capital Ratio

    Net Working Capital Ratio = Net Working Capital / Total Assets

    Where Net Working Capital = Current Assets - Current Liabilities

    Quick Ratio (Acid Test Ratio)

    Quick Ratio = Quick Assets / Current Liabilities

    Where Quick Assets = Current Assets - Inventories - Prepayments

    Liquidity Ratios

    Borrowing Ratio

    Borrowing Ratio = Total Borrowings (Short-term and Long-term) / Total Equity

    Current Ratio

    Current Ratio = Current Assets / Current Liabilities


    Net Working Capital Ratio

    Net Working Capital Ratio = Net Working Capital / Total Assets

    Where Net Working Capital = Current Assets - Current Liabilities

    Net Working Capital Ratio

    Net Working Capital Ratio = Net Working Capital / Total Assets

    Where Net Working Capital = Current Assets - Current Liabilities

    Quick Ratio (Acid Test Ratio)

    Quick Ratio = Quick Assets / Current Liabilities

    Where Quick Assets = Current Assets - Inventories - Prepayments

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