This document defines and provides examples of key financial ratios. It identifies the top 5 ratios as: current ratio, return on investment, equity ratio, dividend yield, and debt to equity ratio. The document explains each ratio's calculation formula. It also calculates ratios like return on investment for Siemens using the company's 2014-2013 financial statements to demonstrate the ratios in practice. Financial ratios are grouped into profitability, liquidity, solvency, and efficiency categories.

1. Examples ofExamples of
Key Financial RatiosKey Financial Ratios
List of Financial Ratios, Interpretation,List of Financial Ratios, Interpretation,
Common Financial Ratios (Formula,Common Financial Ratios (Formula,
What are Financial Ratios,What are Financial Ratios,
Types of Financial Ratios)Types of Financial Ratios)
The KPI Examples ReviewThe KPI Examples Review
Copyright 2017 The KPI Examples Review.
http://kpi-examples.blogspot.com/.

2. Introduction
In this report we define the key financial ratios based on web search
data in 2015. For some of the key financial ratios were defined their
formulas and calculation examples. In all our calculations we used the
official financial statements of Siemens AG for the fiscal years ended
september 30, 2014 and 2013, namely the consolidated statements of
income (D.1), financial position (D.3) and others.

3. 1. List of the 5 Key Financial Ratios
Based on the web search data in 2015, we define the 5 key financial
ratios used to measure a company's performance:
1). Current ratio (working capital ratio);
2). Return on investment (ROI);
3). Equity ratio (proprietary ratio);
4). Dividend yield (dividend-price ratio);
5). Debt to equity ratio (financial leverage).[1]
Source: "List of the 10 Most Important Financial Ratios" (PDF),
https://www.scribd.com/document/336387328/List.

4. All indicators were divided by the four types of financial ratios.
The first type of financial ratios – profitability ratios:
– return on investment (ROI).
The second type of financial ratios – liquidity ratios:
– current ratio (working capital ratio).
The third type of financial ratios – solvency ratios:
– equity ratio (proprietary ratio);
– debt to equity ratio (financial leverage).
The fourth type of financial ratios – efficiency ratios:
– dividend yield (dividend-price ratio).[1]

5. 2. Examples of Key Financial Ratios
Return on Investment (ROI)
The formula for calculating return on investment is:
ROI = (GFI – CFI) / CFI , (2.1)
where
GFI – Gain from Investment;
CFI – Cost from Investment.[1]
The return on investment may also be calculated by dividing net
income by long-term investments (2.2) or average long-term
investments (2.3):

6. ROI = NI / LTI = NI / (LTD + TSE) , (2.2)
where
NI – Net income;
LTI – Long-term investments;
LTD – Long-term debt;
TSE – Total shareholder equity.
ROI = NI / ALTI = NI / ((LTDBP + LTDEP) / 2 + (SEBP +SEEP) / 2)) , (2.3)
where
NI – Net income;
ALTI – Average long-term investments;
LTDBP – Long-term debt at the beginning of a period;
LTDEP – Long-term debt at the end of a period;
SEBP – Shareholder equity at the beginning of a period;
SEEP – Shareholder equity at the end of a period.[1]

7. Example of calculating. Based on the consolidated statements of
income (D.1) and financial position (D.3)[2]
as of september 30, 2014 and
2013, we can calculate the return on investment for the company
Siemens AG (Table 2.1).
Table 2.1. The calculation of return on investment for the company
Siemens AG on the basis of the consolidated financial statements in
2013-2014
(in millions of €) 2014 2013
Net income 5,507 4,409
Long-term debt 19,326 18,509
Total equity attributable to
shareholders of Siemens AG
30,954 28,111
Return on investment 0,110 0,109

8. Return on investment = 5507000 / (19326000 + 30954000) = 0,11 or
11%.[1]
Source: "List of the 10 Most Important Financial Ratios" (PDF),
https://www.scribd.com/document/336387328/List.

9. Current Ratio (Working Capital Ratio)
The formula for calculating current ratio is:
Current ratio = TCA / TCL , (2.4)
where
TCA – Total current assets;
TCL – Total current liabilities.[3]
Source: "Financial KPI: Examples of Liquidity Ratios",
http://kpi-examples.blogspot.com/2016/01/financial-kpi-examples-of-liquidity-ratios.html.

10. Equity Ratio (Proprietary Ratio)
The formula for calculating equity ratio is:
Equity ratio = TSE / TA , (2.5)
where
TSE – Total shareholder equity
TA – Total assets.[3]
Source: "Financial KPI: Examples of Solvency Ratios",
http://kpi-examples.blogspot.com/2016/01/financial-kpi-examples-of-solvency-ratios.html.

11. References
1. Scribd.com, "List of the 10 Most Important Financial Ratios",
https://www.scribd.com/document/336387328/List.
2. Siemens AG, "Siemens Annual Report 2014, Consolidated Financial Statements",
https://www.siemens.com/annual/14/en/download/pdf/Siemens_AR2014_ConsolidatedFinanci
alStatements.pdf.
3. The KPI Examples Review, "List of the 12 Key Financial Ratios: List of Financial Ratios,
Interpretation, Common Financial Ratios (Formula, What are Financial Ratios, Types of
Financial Ratios)",
http://kpi-examples.blogspot.com/2017/01/list-of-financial-ratios-formula.html.

12. "List of the 12 Most Important Financial Ratios"
(eBook)
In this report we define the 12 most important financial ratios
based on web search data in 2015. All indicators were divided by
the five types of financial ratios: profitability ratios, liquidity
ratios, solvency ratios, efficiency ratios and capital market ratios
(Chapter 1).
For each of the key financial ratios were defined their popularity
in different countries, their formulas and calculation examples
(Chapter 2). In all our calculations we used the official financial
statements of Siemens AG.
"List of the 12 Most Important Financial Ratios" (PDF)
presented on the web page:
http://kpi-examples.blogspot.com/2017/01/list-of-financial-ratios-formula.html.