Definition of financial ratios

Financial ratios are ratios between two data in financial statements, which relate to all aspects of enterprise management.

Classification of financial ratios

Financial ratios can be divided into four categories: liquidity ratio, asset management ratio, debt ratio and profitability ratio.

1. liquidity ratio

Mobile ratio (Current ratio)

Liquidity ratio = current assets / current liabilities

Quick ratio = quick assets / current liabilities = (current assets inventory) / current liabilities

Conservative quick ratio

Conservative quick ratio = (cash + short-term securities + notes receivable + net accounts receivable) / current liabilities

Cash flow liabilities ratio

Cash flow liabilities ratio = annual operating cash flow / year-end current liabilities

2. asset management ratio

Inventory turnover

Inventory turnover = selling cost / average stock

Accounts receivable turnover

Accounts receivable turnover = credit sales / average accounts receivable

Accounts payable turnover

Accounts payable turnover = credit / average accounts payable

Turnover of current assets

Turnover of current assets = sales revenue / average current assets

Total assets turnover

Total assets turnover = sales revenue / total assets

Note: "mean" means the arithmetic mean of the beginning balance and the ending balance.

3. debt ratio

Asset liability ratio

Asset liability ratio = Total Liabilities / total assets

Property rights ratio

Equity ratio = Total Liabilities / shareholders Equity

　　· tangible Net debt ratio

Tangible net debt ratio = Total Liabilities / (shareholders' equity - net intangible assets)

Interest multiplier

Interest earned multiple = pretax profit / interest expense.

4. profitability ratio

Sales net interest rate

Net profit margin = net profit Sales income

Gross margin of sales

Gross profit margin = sales revenue sales cost / sales revenue

Net asset interest rate

　 Net asset interest rate = net profit / average assets

Net interest rate or return on net assets.

Net interest rate = net profit / average interest