This document discusses various types of financial ratios used to analyze the financial statements of a business unit. It defines ratio analysis as comparing two components of a balance sheet, profit and loss statement, or trading account to understand trends. The main types of ratios covered are:
1) Profitability ratios like gross profit margin and net profit margin, which indicate earnings levels.
2) Return ratios like return on assets and return on equity, which measure earnings power and returns to investors.
3) Liquidity ratios like current ratio and quick ratio, which analyze a company's ability to meet short-term obligations.
4) Turnover ratios which relate trading figures to balance sheet items to understand stock holding periods
A primer on the 10 variables that every bank investor needs to know, starting with return on equity and finishing with a bank's price-to-book-value ratio.
A primer on the 10 variables that every bank investor needs to know, starting with return on equity and finishing with a bank's price-to-book-value ratio.
Liquidity Ratios are an integral part of financial statement analysis. These are various measures to find or to ascertain the firm’s ability to meet the short term expenses or liabilities and convertibility to liquid assets (for further reading click the link) into cash on requirement. Copy the link given below and paste it in new browser window to get more information on Liquidity Ratio:- http://www.transtutors.com/homework-help/accounting/financial-statement-analysis-liquidity-ratios/
Investment Valuation Ratios are used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. Investment valuation ratios compare relevant data that help users gain an estimate of valuation.
Investment Valuation Ratios: Per Share Ratios, Dividend Per Share (DPS), Earnings Per Share (EPS), Dividend Payout Ratio (DPR),
Dividend Yield Ratio, Price / Earnings ratio (PER), Price to Cash Flow, Price to Book Value, Price to Earnings Growth (PEG), Enterprise Value (EV) multiple
Financial analysis for juhayna & domty co . graduation project zagzig uni...Eslam Fathi
Financial Analysis is the process of selecting, evaluating, and identifying the financial
strength and weaknesses of the firm by properly establishing relationship between
items of financial statements. Firms, bank, loan officers and business owners all use
Financial analysis to learn more about a company’s current financial health as well as its
potential.
Liquidity Ratios are an integral part of financial statement analysis. These are various measures to find or to ascertain the firm’s ability to meet the short term expenses or liabilities and convertibility to liquid assets (for further reading click the link) into cash on requirement. Copy the link given below and paste it in new browser window to get more information on Liquidity Ratio:- http://www.transtutors.com/homework-help/accounting/financial-statement-analysis-liquidity-ratios/
Investment Valuation Ratios are used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. Investment valuation ratios compare relevant data that help users gain an estimate of valuation.
Investment Valuation Ratios: Per Share Ratios, Dividend Per Share (DPS), Earnings Per Share (EPS), Dividend Payout Ratio (DPR),
Dividend Yield Ratio, Price / Earnings ratio (PER), Price to Cash Flow, Price to Book Value, Price to Earnings Growth (PEG), Enterprise Value (EV) multiple
Financial analysis for juhayna & domty co . graduation project zagzig uni...Eslam Fathi
Financial Analysis is the process of selecting, evaluating, and identifying the financial
strength and weaknesses of the firm by properly establishing relationship between
items of financial statements. Firms, bank, loan officers and business owners all use
Financial analysis to learn more about a company’s current financial health as well as its
potential.
Explain the various categories of ratio analysis and provide example.pdfarchanenterprises
Explain the various categories of ratio analysis and provide examples of at least two ratios in
each category. If you were an investor, which category would you be most interested in? Why?
Solution
Part-1
Ratios are used by lenders and business analysts to determine a company\'s financial stability and
standing.It\'s important to understand that financial ratios are time sensitive; they can only show
a picture of a business at a given time. There are five catagories of Financial ratios and those are
as follows :
Part-2 :
There are a large variety of ratios out there, but for an investor using financial ratios which are
broken up into four major categories: profitability ratios, liquidity ratios, solvency ratios and
valuation ratios. As an investor he should consider Profitability ratio because Profitability ratio is
a key piece of information that should be analyzed when you\'re considering investing in a
company. This is because high revenues alone don\'t necessarily translate into dividends for
investors unless a company is able to clear all of its expenses and costs. In general, the higher a
company\'s profit margin, the better, but as with most ratios, it is not enough to look at it in
isolation. It is important to compare it to the company\'s past levels, to the market average and to
its competitors.
Profitability Ratios : The profitability ratios are just what the name implies. They focus on the
firm\'s ability to generate a profit and an adequate return on assets and equity. They measure how
efficiently the firm uses its assets and how effectively it manages its operations and answers
questions like how efficiency his business and it helps to compare with other competitor.
Examples of Proftitablity ratios are Gross profit ratio, Net profit ratio, Operating profit ratio and
Return on investment ratio.
Market Value Ratios : The market value ratios can be calculated for publicly traded companies
only as they relate to stock price. There are many market value ratios, but a few of the most
commonly used are price/earnings (P/E), book value to share value and dividend yield .
LEVERAGE RATIO /Capital Structure ration : The term capital structure refers to the
relationship between various long term forms of financing such as debentures (long term),
preference share capital and equity share capital including reserves and surpluses. Leverage or
capital structure ratios are calculated to test the long term financial position of a firm. Generally
capital gearing ratio is mainly calculated to analyse the leverage or capital structure of the firm.
Example of ratios are total debt ratios, the debt/equity ratio, the long-term debt ratio, the times
interest earned ratio, the fixed charge coverage ratio, and the cash coverage ratio.
Asset Efficiency or Turnover Ratios : The asset efficiency or turnover ratios measure the
efficiency with which the firm uses its assets to produce sales. As a result, it focuses on both the
income statement (sales) and the .
Financial ratios and their use in understanding Financial StatementsPranav Dedhia
An introduction and in-depth understanding on the importance of Financial ratios in understanding financial statements of business entities along with relevant examples
For one hour short session of bank staff,this much is useful. One can understand basic concept of what is meant by appraisal and what banks finds out for advance case. This much is not enough ,but for beginner of banking course this gives overview of appraisal. Even students studying banking can get idea about what this is and how done
06-04-2024 - NYC Tech Week - Discussion on Vector Databases, Unstructured Data and AI
Discussion on Vector Databases, Unstructured Data and AI
https://www.meetup.com/unstructured-data-meetup-new-york/
This meetup is for people working in unstructured data. Speakers will come present about related topics such as vector databases, LLMs, and managing data at scale. The intended audience of this group includes roles like machine learning engineers, data scientists, data engineers, software engineers, and PMs.This meetup was formerly Milvus Meetup, and is sponsored by Zilliz maintainers of Milvus.
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Empowering the Data Analytics Ecosystem: A Laser Focus on Value
The data analytics ecosystem thrives when every component functions at its peak, unlocking the true potential of data. Here's a laser focus on key areas for an empowered ecosystem:
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By focusing on these precise actions, organizations can create an empowered data analytics ecosystem that delivers real value by driving data-driven decisions and maximizing the return on their data investment.
Opendatabay - Open Data Marketplace.pptxOpendatabay
Opendatabay.com unlocks the power of data for everyone. Open Data Marketplace fosters a collaborative hub for data enthusiasts to explore, share, and contribute to a vast collection of datasets.
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1. By
A R Mankodi
Faculty- NIIT IFBI (PGDB)
Director-Karnavati Coop Bank
Secretary-Bankers’ Club
Ex CEO- Guj State Coop Union
Ex DGM- A D C Bank, Ahmedabad
AMCO Bank,Ahmedabad 1
E mail: armankodi@hotmail.com Mobile 9227282003
2. Q 1 What is ration analysis?
It is a way of comparing two components of
balance sheet/profit loss account or trading account
It helps understanding health, culture and trends of
a unit. This comparison is in form of ratio and
shown as percentage. They are relationships,
which are expressed in quantitative terms between
figures. They show relationships, how figures are
connected with each other in some manner
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A R Mankodi,Faculty Banking Diploma
3. Q 2 Can decision is based only on these ratios?
No. They are indicative only and point at a certain
direction. It just helps formulating decision.
Q 3 How many types of ratios of financial
statements of unit are there?
Profitability Ratio
Return ratio
Liquidity ratio
Turnover ratio
Financial structure ratio (1) Debt (2) Coverage
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A R Mankodi, Faculty Banking Diploma
4. Q 4 What do you know of profitability ratio? What does each
indicate?
Gross profit*100/Sales: This will indicate GP versus sale in percentage
form. This suggests margin earned on sale.
EBDITA*100/Sales: It is Earning Before Depreciation, Interest,
Tax, Adjustments versus sale %
This indicates generation of net profit after all administrative and fixes
costs. This indicates how much is administrative and sale cost on total
sale. Higher the ratio more the sale/admn cost. Not a favorable condition
Net profit*100/Sales: This expresses in percentage from the net
margin available out of total sale. If the sale is huge but this ratio is poor
when the above ratio is high, the unit is said to be having bad
administration or poor net margin. It may be because of higher burden of
interest cost; burden due to cost of commission to agents or sales done
at lower prices or may be force sale. Also Indicates quality of product or
demand in market in case of producing unit. It can indicate availability of
profit for repayment of loan
This can be viewed as repaying capacity too.
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A R Mankodi, Faculty Banking Diploma
5. Q 5 What is return ratios? How do you interpret it?
Return ratios are as follows
Return = Profit After Tax (PAT) + Depreciation + interest
This will suggest actual cash inflow or available cash for repayment.
It may suggest actual profit or creation of value on assets.
Return on Assets (ROA)/Return on Capital Employed (ROCE):
As per following formula
ROA / ROAC = PBDT/Total Assets
Total assets include investments, fix or tangible assets and current
assets. This will suggest earning power of unit. It will also suggest
how far the capital/reserves are used to create meaningful or
productive assets. This may capture diversification trends too. It
shows utilization of funds employed. It is a very useful ratio.
Return on equity: Following formula will find this
Return on equity = PBDIT/Net worth
In case of a company, per share earning power can be known.
Investors understand availability of returns to them from this ratio.
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A R Mankodi, Faculty Banking Diploma
6. Q 6 What is liquidity ratio and what does it
indicate?
This ratio analyses the availability of actual cash in the hands of
the company to meet its expenses and commitments. It can be
viewed as cycle of realization of debtors’ payment.
This is very useful ratio. Many a times the business may be
good, other parameters like sale etc can be good, but the unit
always run short of cash. This is bad health of unit.
Current Ratio: This liquidity group ratio. It is calculated as
follows
Current Ratio=Current Assets/Current Liability.
This decides working capital of unit. It means availability of funds
to finance operation cycle of unit. For cash credit/OD or
working capital finance this provides useful information.
Quick Ratio/Acid test: This is also liquidity group ration.
Quick Ratio= (Current Assets-Stock)/Current Liability
This indicates realisability of working capital from
debtors/investment. 6
A R Mankodi,Faculty Banking Diploma
7. Q 7 What is turnover Ratio? How do you calculate this?
What to find out from this?
This is useful in finding out turnover of stock, holding period of
finished goods, requirement of raw material, credit period,
debtors’ period in production unit. These are important ratios in
industrial finance.
Raw material consumption days=
Stock of RM/yearly consumption*365
Processing RM days = SIP/cost of production*365
Finished goods holding period= FG/cost of sale*365
Credit sale days= Debtors/sales*365
Credit purchase days= Creditors/purchase*365
Stock Turnover= Cost of sale/Average stock (Op stock +
Close stock)/2
Figures are available in trading account and balance sheet.
This relates trading with balance sheet status.
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A R Mankodi,Faculty Banking Diploma
8. Q 8 How do we know stake of owner and liability
on capital?
This ratio indicates borrowing against capital. This
can suggest availability of margin money with unit
and also long term debt. This ration is generally
known as Debt/Equity ratio
Long term debt/equity
Total outside liability/equity.
Higher the ratio higher the borrowed funds. May be
there is more burden of interest and less profitability.
Generally 1:2 or 2.5 are considered good. It also
indicates vulnerability to capital in case of interest
rate raise or downturn of business.
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A R Mankodi,Faculty Banking Diploma
9. Q 9 What are important ratios for term loan
processing?
This ratio is known as Debt Service Coverage
Ratio. (DSCR) It indicates profitability available to
service debt, meaning installments. Interest
coverage Ration can be calculated by ICR
DSCR=PBDITA/EMI Or GP/EMI
ICR= PBDTIA/interest Or GP/interest
If this is positive up to installments or interest it
suggests enough repaying capacity.
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A R Mankodi,Faculty Banking Diploma
10. Q 10 How market ratios are calculated of listed
company? What they suggest?
Earnings Per Share (EPS) = PAT/No of shares.
Price to Earnings Ratio (PE Ratio) =Market price of
share/EPS
Dividend Yield=Dividend/Market price
These give important information to market inventors.
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ARMankodi,FacultyBankingDiploma
11. Q 11 What is trend analysis? How is it useful?
This is historical study of 3 or more year’s financials of unit.
Analyzing can indicate YOY progress or financial health of unit.
Generally it is done by charts or graphs. Following comparison is
useful
Profitability
Turnover
Return
Fund Flow
A base year is selected and each item of that year is taken
as 100%. Others are compared in relative percentage to
base year.
Before finalizing a borrower proposal trend also should be
checked.
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A R Mankodi,Faculty Banking Diploma