Ratio Analysis

Ratios used in financial analysis compare companies to or within an industry. We have listed groups of commonly used ratios with links to examples, explanations, and formulas. Continue reading

Price to Earnings or PE Ratio

The price to earnings ratio (or PE ratio) relates market price to earnings per share. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements. Continue reading

Dividend Yield

The dividend yield ratio shows the earnings distributed to stockholders related to the value of the stock, as calculated on a per-share basis. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the cash flow statement. Continue reading

Dividend Payout Ratio

The dividend payout ratio shows the portion of earnings distributed to stockholders. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the income statement and cash flow statement. Continue reading

Total Asset Turnover Ratio

The total assets turnover ratio measures the use of all assets in terms of sales, by comparing sales with net total assets. This interactive tutorial walks you through the calculations as well as where on the financial statements to find the numbers. Continue reading

Inventory Turnover Ratio

The inventory turnover ratio compares sales to inventories, reflecting a company’s ability to convert inventory into cash. This interactive tutorial walks you through the calculations, and shows you where to find the numbers of your financial statements. Continue reading

Fixed Assets Turnover Ratio

The fixed assets turnover ratio measures how fixed assets are used to generate sales, by comparing sales to net fixed assets. This interactive tutorial walks you through the calculations as well as where to find the numbers on your financial statements. Continue reading

Days Sales Outstanding or DSO

The days sales outstanding ratio (DSO) gives an indication of how long it takes to collect accounts receivables, comparing outstanding receivables to average daily sales. This tutorial walks you through the calculation as well as where on the financial statements you’d find the numbers. Continue reading

Return on Equity Du Pont

Return on equity (ROE) measures profitability related to ownership. Management at Du Pont came up with Return on Equity (Du Pont), an approach that showed that return on equity depends on ROA and the equity multiplier. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements. Continue reading

Return on Equity

Return on equity (ROE) measures profitability related to ownership. This interactive tutorial explains the concept by walking you through the calculations, including where to find the numbers on the financial statements. Continue reading