baf_ref_ratios

	A	B	C	D	E	F	G
1	Financial Analysis Ratios
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3	Measures	Primary type of Measurement	Name(s)	Formula	Data type	Guidance	Interpretation
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5	Common Size Ratios	Position	Common Size - Balance Sheet	Each item ÷	Ratio	N/A	Comparing a company's performance over time, or comparing the results of different companies, requires values that are comparable. Dollar values don't meet this requirement. Analysts deal with this is by converting all numbers to a relative percentage. Common size values do this by dividing ALL numbers in each statement by the same denominator. This means they are percentages.
6		Position	Common Size - Balance Sheet	Total Assets	Ratio	N/A
7		Performance	Common Size - Income Statement	Each item ÷	Ratio	N/A	Same as above
8		Performance	Common Size - Income Statement	Total Revenue	Ratio	N/A	Same as above
9		Performance	Common Size - Cash Flow Statement	Each item ÷	Ratio	N/A	Same as above
10		Performance	Common Size - Cash Flow Statement	Total Revenue	Ratio	N/A	Same as above
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12	Risk exposure due to solvency and/or liquidity	Position	Current Ratio	Current Assets ÷	Ratio	2 is ideal	A 2 means you have twice the value of current assets that you have of current liabilities = ability to pay debts twice over
13			Current Ratio	Current Liabilities	Ratio	2 is ideal
14		Position	Quick Ratio/Acid Test	Current Assets above Inventory ÷	Ratio	1 is ideal	Not all current assets can be sold quickly (nobody wants your dirty cleaning supplies for example). It's like the current ratio, but measures only the most liquid assets (those listed above Inventory)
15			Quick Ratio/Acid Test	Current Liabilities	Ratio	1 is ideal
16		Performance	Accounts Receivable Turnover	365 ÷ (Net Sales on Credit ÷	in days	Lower is better	This shows how long it takes you to collect your receivables in the period. Lower means it takes a smaller fraction of the year for you to collect your money. This means you don’t have lots of your cash in the hands of customers who aren’t paying = better use of cash
17			Accounts Receivable Turnover	Average Book Value of Accounts Receivable)	in days	Lower is better
18		Performance	Inventory Turnover	365 ÷ (Cost of Goods Sold ÷	in days	Lower is better	This measures the fraction of a year that it takes to sell through your inventory once. Less time means you get your hands on your money faster (and can order more inventory sooner and make more money).
19			Inventory Turnover	Average Inventory)	in days	Lower is better
20		Performance	Operating Cycle	Inventory Turnover +	in days	Lower is better	These two turnovers together measure how long it takes to buy goods, sell them, and then collect the money and start the cycle again. This is one business (or operating) cycle. The lower the number, the faster you can do it, and that means the more often you can do it in the year. This of course means more sales and less risk of insolvency.
21			Operating Cycle	Accounts Receivable Turnover	in days	Lower is better
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23	Ability to Generate Cash/ Borrowing Capacity	Position/ Performance	Cash Flow to Current Debt	Cash from Operations ÷	Ratio	Higher is better	Indicates the amount of cash to pay off current debt that is generated from operating activities. The ratio provides a better picture of liquidity than using the current ratio because it uses cash provided by operating activities over the year rather than the year-end asset balance.
24			Cash Flow to Current Debt	Average Current Liabilities	Ratio	Higher is better
25		Position/ Performance	Cash Flow to Total Debt	Cash from Operations ÷	Ratio	Higher is better	Indicates the amount of cash to pay off total debt that is generated from operating activities. The ratio is the cash based counterpart to the debt ratio.
26			Cash Flow to Total Debt	Average Total Liabilities	Ratio	Higher is better
27		Performance	Cash Return on Sales	Cash from Operations ÷	Ratio	Higher is better	Cash return on sales indicates how quickly sales are turned into cash. The company is efficient at turning sales into cash the closer its cash return on sales is to its profit margin.
28			Cash Return on Sales	Net Sales	Ratio	Higher is better
29		Performance	Cash Flow per Share	Total Cash Flow ÷	Dollar value	Higher is better	Cash flow per share indicates the cash flow generated for each common share. This is useful for investors because they like to compare all values relative to the price of a share of stock.
30			Cash Flow per Share	Common Shares Issued	Dollar value	Higher is better
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32	Borrowing Capacity	Position	Debt Ratio	Total Liabilities ÷	Ratio	Less than 50% is ideal	This measures the percentage of all the assets that are financed with debt. The higher the number, the greater the risk of insolvency due to higher interest rates, mortgage payments, etc.
33			Debt Ratio	Total Assets	Ratio	Less than 50% is ideal
34		Performance	Times Interest Earned	EBITA ÷	Ratio	Higher is better	This measures a company’s exposure to changes in the interest rate. If they can pay their interest charges many times over, they’re ok.
35			Times Interest Earned	Interest Expense	Ratio	Higher is better
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37	Profitability/ Efficiency	Performance	Return on Assets	Net Income ÷	Ratio	Higher is better	This is also a measure of efficiency. Compares the size of your profit to the value of all the business’s assets. The larger the number, the more money you are able to make for each dollar the business has invested in assets. If it’s low, you have a lot of cash tied up to generate very little profit = low efficiency
38			Return on Assets	Average Assets	Ratio	Higher is better
39		Performance	Return on Equity	Net Income ÷	Ratio	Higher is better	This is also a measure of efficiency. Compares the size of your profit to the size of your equity. The larger the number, the more money you are making for each dollar of your investment in the business = more efficient investment for you
40			Return on Equity	Average Equity	Ratio	Higher is better
41		Performance	Return on Sales	Net Income ÷	Ratio	Higher is better	This is a measure of profitability or efficiency. It states what share of your sales is profit to you. It’s a measure of your ability to control costs and generate sales efficiently.
42			Return on Sales	Net Sales	Ratio	Higher is better
43		Performance	Earnings per Share (EPS)	Net Income ÷	Dollar value	Higher is better	This is a measure of profitability per share. Again, investors like per share data as it makes it easier to compare profit to the value of the stock they own.
44			Earnings per Share (EPS)	Common Shares	Dollar value	Higher is better
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