Financial Statement Analysis | Learn all concepts and topics with our wide range of free resources
Better Returns using Assets – Importance of ROA Return on Assets is yet another important profitability ratio that explains the company’s ability to earn profits by utilizing its Assets. Previously, we saw how to evaluate a company’s performance using Capital based Return ratios like Return on Capital Employed or Return on Invested Capital. In this …
Evaluating based on Return ratios When evaluating if the company is performing better, using sales-based return ratios like EBITDA margin, Operating profit margin or net profit margin may not be sufficient. One must look at how efficient the company is in utilizing its Capital while generating profit. That’s when Capital based return ratios come into …
Return on Invested Capital – A better return ratio Earlier, we looked at how to evaluate companies better with capital-based return ratios like Return on Capital Employed (ROCE) apart from using sales-based return ratios Gross Profit margin, Operating Profit margin, or Net profit margin One such return ratio which is often considered better is – …
What is Capital Gearing Ratio? In this resource, we will understand the Gearing ratio, specifically the Capital Gearing ratio. We will learn how to calculate it, know its importance and drawbacks. Also, in the later section, we will compare how different is the ratio for companies in various sectors As part of business operation companies …
What is Net Profit Margin? As part of profitability analysis, Net Profit margin or Net Margin (also called after-tax Margin or PAT Margin ) is the most important ratio one must look at. Net profit gives a more conclusive picture of the company’s profitability. It tells us how profitable was the company after factoring in …
What is EBITDA margin? Earlier, we understood everything about Gross Profit Margin ratio. Now, let us put our focus on yet another important profitability ratio – EBITDA margin (pronounced EE-BIT-DAH) As part of this resource, let us understand the meaning of this margin, learn how to calculate it, know its importance and drawbacks. Also, in …
What is the Debt to Equity ratio? One of the most widely used Solvency Ratio or Leverage Ratio is the Debt to Equity ratio or DE Ratio. In evaluating stocks for investment, the Debt-Equity ratio is the most prominent financial ratio. It helps in understanding the likelihood of the stock to perform better relative to …
What is the Debt to Asset ratio? As part of Solvency ratio analysis, it becomes very important to understand how the company’s assets are funded. This is when the Debt to Asset ratio comes to the play. Also called as Debt Ratio, it is one of the most used ratio by Investors and Lenders to …
What is the Debt to Capital ratio? While analyzing a company’s Capital Structure, Solvency Ratios are most widely used. Debt to Capital ratio is one such Solvency ratio. This ratio is most often used by Investors and Lenders to evaluate if the company is overburdened with Debt. Debt to Capital ratio Meaning As part of …
What is the Pretax Profit margin ratio? Pretax Profit margin or Profit before Tax margin is a profitability ratio that helps in understanding the company performance for a given period. Unlike Gross Profit margin ratio, that considers only Direct expenses or Cost of Sales, this ratio is arrived after considering all expenses except Taxes. Pretax Profit Margin Meaning …