Current ratio

The current ratio is a popular financial ratio used to test a company's liquidity (also referred
to as its current or working capital position) by deriving the proportion of current assets
available to cover current liabilities.

Quick ratio
The quick ratio - aka the quick assets ratio or the acid-test ratio - is a liquidity indicator that
further refines the current ratio by measuring the amount of the most liquid current assets
there are to cover current liabilities. The quick ratio is more conservative than the current
ratio because it excludes inventory and other current assets, which are more difficult to turn
into cash. Therefore, a higher ratio means a more liquid current position.
Inventory turnover
The inventory turnover formula measures the rate at which inventory is used over a
measurement period.
Asset turnover ratio
The asset turnover ratio is an efficiency ratio that measures a company's ability to generate
sales from its assets by comparing net sales with average total assets. In other words, this
ratio shows how efficiently a company can use its assets to generate sales.
Account receivables ratio
Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many
times a business can turn its accounts receivable into cash during a period. In other words,
the accounts receivable turnover ratio measures how many times a business can collect its
average accounts receivable during the year.
Average collection period
The average collection period of accounts receivable is the average number of days it takes
to convert receivables into cash. It is the average number of days that it takes customers to
pay their credit accounts.
Gross margin
Definition
Gross profit margin (gross margin) is the ratio of gross profit (gross sales less cost of sales)
to sales revenue. It is the percentage by which gross profits exceed production costs. Gross
margins reveal how much a company earns taking into consideration the costs that it incurs

for producing its products or services. Gross margin is a good indication of how profitable a
company is at the most fundamental level, how efficiently a company uses its resources,
materials, and labour. It is usually expressed as a percentage, and indicates the profitability
of a business before overhead costs; it is a measure of how well a company controls its
costs.

Net profit margin

The net profit margin, also known as net margin, indicates how much net income a
company makes with total sales achieved. A higher net profit margin means that a
company is more efficient at converting sales into actual profit.

Return on equity
The return on equity ratio or ROE is a profitability ratio that measures the ability of a
firm to generate profits from its shareholders investments in the company. In other
words, the return on equity ratio shows how much profit each dollar of common
stockholders' equity generates.
Return on assets
The return on assets ratio, often called the return on total assets, is a profitability
ratio that measures the net income produced by total assets during a period by
comparing net income to the average total assets. In other words, the return on
assets ratio or ROA measures how efficiently a company can manage its assets to
produce profits during a period.
Debt ratio
Debt ratio is a solvency ratio that measures a firm's total liabilities as a percentage
of its total assets. In a sense, the debt ratio shows a company's ability to pay off its
liabilities with its assets. In other words, this shows how many assets the company
must sell in order to pay off all of its liabilities.
Debt to equity ratio
The debt to equity ratio is a financial, liquidity ratio that compares a company's
total debt to total equity. The debt to equity ratio shows the percentage of company
financing that comes from creditors and investors. A higher debt to equity ratio
indicates that more creditor financing (bank loans) is used than investor financing
(shareholders).