Financial Ratios

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3	Ratio	Ratio Sub-Type	Formula	In English	What am I looking for?	Link
4	Price to Earnings Ratio	Price	Price per Share / Earnings Per Share	How much you pay for $1 in earnings	Lower is generally better**	http://www.investopedia.com/university/ratios/investment-valuation/ratio4.asp
5	PEG Ratio	Price	(P/E Ratio) / Projected Annual Growth in Earnings per Share	Like P/E, but accounts for estimates of future growth	<1.0 is generally good**	http://www.investopedia.com/university/ratios/investment-valuation/ratio5.asp
6	Price to Sales Ratio	Price	Price per Share / Annual Sales Per Share	How much you pay for $1 in sales	Lower is generally better, but if high, why are investors willing to pay a higher price?	http://www.investopedia.com/university/ratios/investment-valuation/ratio6.asp
7	Price to Book Ratio	Price	Price per Share / Book Value per Share	How much you pay for $1 in equity	Lower is generally better, but if high, why are investors willing to pay a higher price?	http://www.investopedia.com/terms/p/price-to-bookratio.asp
8	Dividend Yield	Price	Dividend per Share / Price per Share	How much return will I get through a dividend	Higher	http://www.investopedia.com/university/ratios/investment-valuation/ratio7.asp
9	Dividend Payout Ratio	Price	Dividend / Net Income	The percentage of profits that are distributed as dividends	Higher	http://www.investopedia.com/terms/p/payoutratio.asp
10	Return on Assets	Profitability	Net Income / Average Total Assets	How good the company is at using its assets to make money	Higher	http://www.investopedia.com/university/ratios/profitability-indicator/ratio3.asp
11	Return on Equity	Profitability	Net Income / Average Stockholder Equity	How good a company is at rewarding its shareholders for their investment	Higher	http://www.investopedia.com/university/ratios/profitability-indicator/ratio4.asp
12	Return on Capital Employed	Profitability	EBIT / Capital Employed (Capital Employed = Average Debt Liabilities + Average Shareholder's Equity)	This measure narrows the focus to gain a better understanding of a company's ability to generate returns from its available capital base.	Higher	http://www.investopedia.com/university/ratios/profitability-indicator/ratio5.asp
13	Profit Margin	Profitability	Net Income / Sales	How much of a company's total sales flow through to the bottom line	Higher and increasing	http://www.investopedia.com/terms/p/profitmargin.asp
14	Effective Tax Rate	Profitability	Income Tax Expense / Pretax Income	This gives a better idea of the tax rate that a company really face. It is often different from the stated legal tax rate due to accounting factors like foreign exchange provisions.	Lower	http://www.investopedia.com/university/ratios/profitability-indicator/ratio2.asp
15	Current Ratio	Liquidity	Current Assets / Current Liabilities	Company's ability to pay its short-term liabilities with its short-term asset	>1.0	http://www.investopedia.com/university/ratios/liquidity-measurement/ratio1.asp
16	Quick Ratio	Liquidity	(Current Assets - Inventory) / Current Liabilities	Company's ability to pay its short-term liabilities with its short-term asset, assuming inventory will take time to turnover	Higher is better, compare with current ratio	http://www.investopedia.com/university/ratios/liquidity-measurement/ratio2.asp
17	Cash Ratio	Liquidity	(Cash + Cash Equivalents + Invested Fund)/Current Liabilities	A more refined measure of a company's liquidity that includes cash.	Higher	http://www.investopedia.com/university/ratios/liquidity-measurement/ratio3.asp
18	Cash Conversion Cycle	Liquidity	Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) + Days Payables Outstanding (DPO)	This liquidity metric expresses the length of time (in days) that a company uses to sell inventory, collect receivables and pay its accounts payable.	Depends on the industry. If the company is in a high volume industry, then low. If not, then higher.	http://www.investopedia.com/university/ratios/liquidity-measurement/ratio4.asp
19	Debt Ratio	Debt	Total Liabilities / Total Assets	Comparing a company's debt to its assets, giving a basic pictures of the company's financial leverage.	Lower unless the industry is generally highly leveraged (e.g. financials industry)	http://www.investopedia.com/university/ratios/debt/ratio2.asp
20	Debt to Equity Ratio	Debt	Total Liabilities / Total Shareholder Equity	Amount of capital that has been borrowed compared to the amount of capital contributed by shareholders	Increases are indicators of bankruptcy risk	http://www.investopedia.com/terms/d/debtequityratio.asp
21	Interest Coverage Ratio	Debt	Earnigns Before Interest and Taxes / Interest Expense	How well a company can meet its interest payment obligations	<1.0 is trouble	http://www.investopedia.com/terms/i/interestcoverageratio.asp
22	Capitalization Ratio	Debt	Longterm Debt / (Longterm Debt + Shareholders Equity)	Measures the debt compontent of a company's capital structure	Depends on the industry.	http://www.investopedia.com/university/ratios/debt/ratio4.asp
23	Cash Flow to Debt Ratio	Debt	Operating Cash Flow / Total Debt	his ratio provides an indication of a company's ability to cover total debt with its yearly cash flow from operations.	Higher	http://www.investopedia.com/university/ratios/debt/ratio6.asp
24	Operating Cash Flow to Sales Ratio	Cash Flow	Operating Cash Flow / Revenue	Gives investors an idea of how good a company is at turning sales into cash	Higher	http://www.investopedia.com/university/ratios/cash-flow-indicator/ratio1.asp
25	Free Cash Flow to Operating Cash Flow Ratio	Cash Flow	Free Cash Flow / Operating Cash Flow	Tells how much cash is left over as "free" which can be used for expansion, acquisition, etc.	Higher	http://www.investopedia.com/university/ratios/cash-flow-indicator/ratio2.asp
26	Cash Flow Coverage Ratio	Cash Flow		Tells how able a company is at meeting obligations with operating cash flow	Higher	http://www.investopedia.com/university/ratios/cash-flow-indicator/ratio3.asp
27	Asset Turnover Ratio	Operational Efficiency	Sales / Average Total Assets	How good the company is at using its assets to make products to sell	Higher	http://www.investopedia.com/terms/a/assetturnover.asp
28	Sales to Revenue per Employee	Operational Efficiency	Revenue / Number of Employees	Gives a guage of personnel productivity.	Depends on whether the business is labor intensive	http://www.investopedia.com/university/ratios/operating-performance/ratio2.asp
29	Inventory Turnover Ratio	Operational Efficiency	Costs of Goods Sold / Average Inventory	A company's efficiency in cycling inventory	High means selling quicker, so need to replenish stock faster	http://www.investopedia.com/terms/i/inventoryturnover.asp
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