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Ratio Analysis: Dividend Cover Max Div That Could Be Paid Actual Div

The document discusses various types of ratios used for financial analysis, including ratios from the shareholders' perspective like earnings per share and price-earnings ratio. It also covers profitability ratios, liquidity ratios, activity ratios, financial leverage ratios, and market ratios. These ratios are calculated using information from a company's financial statements and used to analyze its performance and financial position.

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Sheikh Wicky
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35 views

Ratio Analysis: Dividend Cover Max Div That Could Be Paid Actual Div

The document discusses various types of ratios used for financial analysis, including ratios from the shareholders' perspective like earnings per share and price-earnings ratio. It also covers profitability ratios, liquidity ratios, activity ratios, financial leverage ratios, and market ratios. These ratios are calculated using information from a company's financial statements and used to analyze its performance and financial position.

Uploaded by

Sheikh Wicky
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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RATIO ANALYSIS

1. Ratios from shareholders point of view.


Earnings Per Share EPS! " Net Profit
No. of Shares
Market / Book Ratio = Market Price per share of common stock
Book value per share of common stock
Diluted EPS = N.P Less Pref Div
Euit! Shares"Pref Shares"De# $onversion option
Pri#e Earning Ratio " $ar%et Pri#e & Share
Earning Per Share
Pa'o(t Ratio " )iv Per E*(it' Share
Earning Per Share
)ividend Yield " )iv Per E*(it' Share " Ann(al )ividend pa'ment
$ar%et Pri#e & Share $+T ,apitali-ation
Dividend $over = Ma% Div that could #e paid
&ctual Div
Earnings Yield " Earning Per Share . 1//
$ar%et Pri#e & Share
0. Profita1ilit' Ratio2
a. Sales Ratios2
i' Sales to fi%ed assets or (& turnover ratio = (i%ed &ssets % )**
Sales
ii' Sales to o+ned capital or total net +orth = ,otal net -orth % )**
Sales
iii' Sales to +orkin. capital = -orkin. capital % )**
Sales
1. E.penses Ratios2
i' (/0 to sales = (/0 % )**
Sales
ii' &dmin e%penses to sales = &dmin E%p % )**
Sales
iii' Sellin. e%penses to sales = Sellin. E%p % )**
Sales
Page 1 of 3
#. Profita1ilit' Ratios2
i' 1ross Profit Mar.in = 1ross Profit % )**
Net Sales
ii' /peratin. Profit Ratio = /peratin. Profit % )** = EB2,
Sales Net Sales
iii' Net Profit Mar.in = Net Profit % )** = Earnin.s &vaila#le to $S
Sales Sales
iv' Earnin. Per Share = Net Profit
No. of Shares /utstandin.
v' Return on ,otal &ssets = Earnin. availa#le for common stockholders
,otal &ssets
vi' Return on $ommon Euit! = Earnin. availa#le for common stockholders
$ommon Stock Euit!
vii' R/$E = Net Profit
(i%ed assets " -orkin. capital
$ommon si3e financial statements
3. Li*(idit' Ratios2
i' $urrent Ratio = $urrent &ssets
$urrent Lia#ilities
ii' &cid ,est Ratio = $urrent &ssets 4 2nventor!
56uick Ratio' $urrent Lia#ilities
iii' $urrent Lia#ilities to ,an.i#le Net -orth = $urrent Lia#ilities
Net -orth
4. A#tivit' Ratios2
2nventor! ,urnover = $ost of .oods sold
2nventor!
2nventor! No. of da!s = 2nventor! = 789
/r 5&vera.e &.e of 2nventor!' $/1S / 789 2nventor! ,urnover
&vera.e $ollection Period = &ccounts Receiva#les
&nnual 5Net' Sales / 789
&vera.e Pa!ment Period = &ccounts Pa!a#le
&vera.e purchases per da!
= &ccounts Pa!a#le
&nnual purchases
789
,otal &ssets ,urnover = Net Sales:::::
,otal &ssets
Page 0 of 3
5. 6inan#ial Leverage Ratios )E7T Ratios!2
De#t Euit! Ratio = De#t:
Euit!
De#t Ratios = ,otal Lia#ilities
,otal &ssets
Net income to De#t Service Ratio = N.P #efore ta% ; interest
2nterest on loans
,imes 2nterest Earned Ratio = EB2,
2nterest
(i%ed Pa!ment $overa.e Ratio = EB2, " Lease Pa!ments
2nterest " Lease Pa!ments " 5Principal &mount
" Preference div' % 5)/5)4,''
8. $ar%et Ratio2
). Price Earnin.s Ratio = Market Price Per share of $ommon Stock
Earnin.s per share
<. Market/ Book Ratio = Market Price per share of $ommon Stock
Book value per share= of $ommon Stock
= $ommon stock euit!
No. of shares
7. B>/Share = $ommon Stock Euit!
Num#er of Shares of $ommon Stock
Page 3 of 3

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