Fundamentals

Average Interest Rate

Indicates the average interest rate that a company borrows at.

$$={(Interest Expense - Accounts Payable) \over Liabilities}$$

Book Value Per Share

Somewhat similar to the EPS, but it relates the stockholder's equity to the number of shares, giving the shares a raw value

$$={(Stockholders Equity - Preferred Stock) \over Average Outstanding Shares}$$

Cash Flow To Assets

This ratio indicates the cash a company can generate in relation to its size.

$$={Cash from Operations \over Total Assets}$$

Common Size Analysis

Indicates the proportion of an asset/liability/expense is as a function of total assets/liabilities/revenue.

$$={Entity \over Total Entity}$$

Dividend Payout Ratio

Indicates the proportion of earnings that are used to pay dividends to shareholders.

$$={Yearly Dividends Per Share \over Earnings Per Share}$$

Earnings Per Share

The most widely used ratio, it tells how much profit was generated on a per share basis.

$$={(Net Income - Dividends on Preferred Stock) \over Average Outstanding Shares}$$

Gross Profit Margin

Indicates what the company's pricing policy is and what the true mark-up margins are.

$$={(Revenue - Cost of Goods) \over Revenue}$$

Price/Earnings Ratio

One of the most widely used ratios, it compares the current price with earnings to see if a stock is over or under valued.

$$={Market Value Per Share \over Earnings Per Share}$$

Profit Margin

Indicates what percentage of sales contribute to the income of a company.

$$={Net Income \over Revenue}$$

Return on Assets

Indicates what return a company is generating on the firm's investments/assets.

$$={(Net Income + Interest Expense) \over Total Assets}$$

Return on Equity

Indicates what return a company is generating on the owners' investment.

$$={Net Income \over Shareholder Equity}$$

Asset Turnover Ratio

Indicates the relationship between assets and revenue.

$$={Revenue \over Total Assets}$$

Collection Ratio

This indicates the average number of days it takes a company to collect unpaid invoices.

$$={Accounts Receivable \over (Revenue / 365)}$$

Inventory Turnover

An important and often overlooked ratio that indicates inventory levels.

$$={Cost of Goods Sold \over Average Inventory}$$

Debt-to-Assets Ratio

Indicates what proportion of the company's assets are being financed through debt.

$$={Total Liabilities \over Total Assets}$$

Debt-to-Equity Ratio

Indicates what proportion of equity and debt that the company is using to finance its assets. Sometimes investors only use long term debt instead of total liabilities.

$$={Total Liabilities \over Shareholder Equity}$$

Acid Test (Quick Ratio)

A stringent test that indicates if a firm has enough short-term assets (without selling inventory) to cover its immediate liabilities. It is similar but a more strenuous version of the "working capital", indicating whether liabilities could be paid without selling inventory.

$$={(Cash + Acct Receivable + Short Term Invest) \over Current Liabilities}$$

Interest Coverage Ratio

Indicates what portion of debt interest is covered by a company's cash flow situation.

$$={EBITDA \over Interest Expense}$$

Working Capital Ratio

Indicates if a firm has enough short-term assets to cover its immediate liabilities.

$$={Current Assets \over Current Liabilities}$$