Solvency ratio By Deepak Madan (Mcom B.ed)
•Download as PPTX, PDF•
0 likes•1,142 views
This document defines and explains several financial ratios used to analyze a company's solvency, debt levels, and profitability: - Solvency Ratio measures long-term debt compared to shareholder equity. A ratio of 2:1 is generally considered acceptable. - Total Assets to Debt Ratio expresses total assets relative to long-term debt. A ratio of 1:1 or 2:1 indicates a sufficient margin of safety for long-term lenders. - Proprietary Ratio indicates the proportion of total assets funded by shareholders. Generally a higher percentage shows a stronger financial position. - Interest Coverage Ratio measures profit before interest and taxes relative to fixed interest charges. A ratio of 6
Report
Share
Report
Share
Recommended
Financial Ratios - Introduction to Solvency Ratios
This document discusses various solvency ratios that are used to measure a company's ability to meet its debt obligations. It defines solvency ratios as key metrics that indicate whether a company's cash flow is sufficient to meet its short and long-term liabilities. The document then proceeds to define and provide formulas for calculating specific solvency ratios, including debt-equity ratio, debt-to-capital employed ratio, proprietary ratio, total assets to debt ratio, and interest coverage ratio. It stresses that solvency ratios should be compared within an industry rather than viewed in isolation.
Solvency Ratio (Infosys)
This document analyzes various solvency ratios for Infosys, including debt-equity ratio, total assets to debt ratio, and proprietary ratio for 2013 and 2014. The debt-equity ratio was low for both years, implying more equity financing. The total assets to debt ratio was high for both years, representing higher security for lenders. The proprietary ratio was high but declined slightly, indicating adequate safety for creditors. The document concludes the ratios show Infosys has a strong financial position and safety margins.
Analyzing solvency of companies
This document analyzes the solvency of companies using various ratios. It discusses both long-term and short-term solvency ratios. For long-term ratios, it calculates the debt-equity ratio, debt-assets ratio, and interest coverage ratio for Tata Motors and Maruti Suzuki. For short-term ratios, it provides the current ratio and acid test ratio for both companies. The document finds that Maruti Suzuki generally performs better on the solvency ratios compared to Tata Motors.
Solvency ratio – apollo tyres ltd
Apollo Tyres Ltd is the world's 17th biggest tyre manufacturer with annual revenues of $2.5 billion in 2011. The document analyzes Apollo's solvency ratios from 2011-2014 which measure its ability to meet debt obligations. The current, quick, total debt, and debt-equity ratios have remained relatively stable and healthy over this period indicating Apollo can adequately cover its short-term liabilities. Additionally, the interest coverage ratio exceeding 2 shows Apollo earns more than enough to pay interest costs, demonstrating strong solvency.
Liquidity Ratio | Accounting
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/
15030141102
The document defines debt, equity, and the debt-to-equity ratio. It states that the debt-to-equity ratio compares the proportion of shareholders' equity and debt used to finance a company's assets, and is calculated by dividing total debt by total shareholders' equity. The document provides an example calculation using the information for a sample Company XYZ, showing its debt-to-equity ratio is 1.5 or 150%.
Ratio Analysis Presentation
This document discusses various financial ratios used to evaluate a company's liquidity and debt obligations. It defines current ratio, quick ratio, and cash ratio as measures of liquidity, calculated by dividing different levels of current assets by current liabilities. A higher ratio indicates greater ability to meet short-term debts. Debt ratio is defined as total debt divided by total assets to indicate the percentage of assets financed by debt. The document then provides an example company's current assets, liabilities, and calculates its quick and current ratios to demonstrate its liquidity.
Understanding the gearing ratio
Assessing risk in a business has a lot to do with understanding the business' gearing (or leverage) ratio. This presentation takes highlights what you need to look for when analysing the ratio and some of the adjustments that sometimes have to be made.
Recommended
Financial Ratios - Introduction to Solvency Ratios
This document discusses various solvency ratios that are used to measure a company's ability to meet its debt obligations. It defines solvency ratios as key metrics that indicate whether a company's cash flow is sufficient to meet its short and long-term liabilities. The document then proceeds to define and provide formulas for calculating specific solvency ratios, including debt-equity ratio, debt-to-capital employed ratio, proprietary ratio, total assets to debt ratio, and interest coverage ratio. It stresses that solvency ratios should be compared within an industry rather than viewed in isolation.
Solvency Ratio (Infosys)
This document analyzes various solvency ratios for Infosys, including debt-equity ratio, total assets to debt ratio, and proprietary ratio for 2013 and 2014. The debt-equity ratio was low for both years, implying more equity financing. The total assets to debt ratio was high for both years, representing higher security for lenders. The proprietary ratio was high but declined slightly, indicating adequate safety for creditors. The document concludes the ratios show Infosys has a strong financial position and safety margins.
Analyzing solvency of companies
This document analyzes the solvency of companies using various ratios. It discusses both long-term and short-term solvency ratios. For long-term ratios, it calculates the debt-equity ratio, debt-assets ratio, and interest coverage ratio for Tata Motors and Maruti Suzuki. For short-term ratios, it provides the current ratio and acid test ratio for both companies. The document finds that Maruti Suzuki generally performs better on the solvency ratios compared to Tata Motors.
Solvency ratio – apollo tyres ltd
Apollo Tyres Ltd is the world's 17th biggest tyre manufacturer with annual revenues of $2.5 billion in 2011. The document analyzes Apollo's solvency ratios from 2011-2014 which measure its ability to meet debt obligations. The current, quick, total debt, and debt-equity ratios have remained relatively stable and healthy over this period indicating Apollo can adequately cover its short-term liabilities. Additionally, the interest coverage ratio exceeding 2 shows Apollo earns more than enough to pay interest costs, demonstrating strong solvency.
Liquidity Ratio | Accounting
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/
15030141102
The document defines debt, equity, and the debt-to-equity ratio. It states that the debt-to-equity ratio compares the proportion of shareholders' equity and debt used to finance a company's assets, and is calculated by dividing total debt by total shareholders' equity. The document provides an example calculation using the information for a sample Company XYZ, showing its debt-to-equity ratio is 1.5 or 150%.
Ratio Analysis Presentation
This document discusses various financial ratios used to evaluate a company's liquidity and debt obligations. It defines current ratio, quick ratio, and cash ratio as measures of liquidity, calculated by dividing different levels of current assets by current liabilities. A higher ratio indicates greater ability to meet short-term debts. Debt ratio is defined as total debt divided by total assets to indicate the percentage of assets financed by debt. The document then provides an example company's current assets, liabilities, and calculates its quick and current ratios to demonstrate its liquidity.
Understanding the gearing ratio
Assessing risk in a business has a lot to do with understanding the business' gearing (or leverage) ratio. This presentation takes highlights what you need to look for when analysing the ratio and some of the adjustments that sometimes have to be made.
Cash Coverage | Finance
Coverage Ratio establishes relationship between the company’s financial obligations with the available resources to pay them off. In simple terms, it measures the ability to repay the liabilities of an entity. Copy the link given below and paste it in new browser window to get more information on Cash Coverage:- http://www.transtutors.com/homework-help/corporate-finance/financial-statement-analysis/ratio-analysis/long-term-solvency-measures/cash-coverage/
Ratio analysis
Ratio analysis is a method of expressing the relationships between financial statement elements. It is used to evaluate a firm's performance, strengths, weaknesses, and ability to meet obligations. Ratios can be classified into liquidity, capital structure, turnover/activity, and profitability. Liquidity ratios measure short-term debt paying ability, capital structure ratios measure financial risk, turnover ratios measure asset use efficiency, and profitability ratios measure profit generation. Ratio analysis allows stakeholders to assess the firm's performance, financial condition, and risk.
Leverage ratios
This document discusses various leverage ratios that can be used to measure how leveraged or indebted a company is. It defines leverage ratios as ratios that measure how much debt a company is using compared to its equity. It then lists some common leverage ratios including debt-equity ratio, interest coverage ratio, debt service coverage ratio, and debt ratio. For each ratio, it provides the formula and an example calculation to illustrate how to use the ratio. The document emphasizes that leverage ratios indicate a company's ability to repay its long-term debts and service the interest on its debt. Too much debt can make a company riskier and more vulnerable to changes in interest rates.
Liquidity ratio
The document analyzes various liquidity ratios for a company from 2007-2011. It defines liquidity ratios as ratios that measure a company's ability to meet short-term debt obligations. It then calculates and interprets the current ratio, quick ratio, absolute liquid ratio, and inventory to working capital ratio for each year. The ratios show fluctuating trends over the years, with some ratios highest in 2008 and others lowest in 2007, indicating insufficient liquidity and an inability to meet short-term obligations based on standard thresholds.
Liquidity ratio By- Deepak Madan (M.com, B.ed)
This document discusses accounting ratios, specifically liquidity ratios. It defines liquidity ratios as ratios that assess a firm's ability to pay current liabilities. Two key liquidity ratios are discussed in detail:
The current ratio compares current assets to current liabilities and measures a firm's ability to pay off current debts with current assets. A ratio of 2:1 is generally considered adequate.
The quick ratio compares more liquid current assets (excluding inventory and prepaid expenses) to current liabilities and measures a firm's ability to pay current debts within a month. A ratio of 1:1 is generally considered adequate.
The document provides the detailed formulas and interpretations of these two important liquidity ratios.
Financial accounting
Introduction to ratio analysis by Owusu Attakorah HND Automotive Engineering, BSc (Hons) Mechatronics Engineering, MBA.
Ratio Analysis
The document discusses ratio analysis for financial accounting. It defines various types of financial ratios including profitability, liquidity, efficiency, capital structure, and investment ratios. For each ratio type, it provides the calculation formula and explains how to interpret the results. The key points are to identify appropriate ratios, calculate and evaluate them, and use ratios to analyze a company's performance over time and compare to industry benchmarks. Ratios have limitations but can provide insights into a business's financial health and efficiency.
Slbc100 assignment 1 ratio analysis - collaborate session - tp1 2014 (1)
This document provides instructions for a ratio analysis assignment due on May 19, 2014. Students are required to calculate 11 financial ratios for the years 2010, 2012 and 2012 using the company's data. The ratios must be grouped under profitability, efficiency, liquidity and capital structure headings. Students must show the calculations and formulas in an appendix. In the main report, students must discuss the significance of each ratio, trends over time and how the ratios would influence a bank's decision to approve or decline a loan application for the company. The report must follow a specified structure and word limit. Detailed descriptions and examples of how to calculate and interpret each ratio are provided.
Liquidity ratios
The document discusses liquidity ratios, which analyze a firm's short-term financial position and ability to meet current liabilities with current assets. It defines the current ratio as current assets divided by current liabilities, with 1.5:1 typically considered satisfactory. The quick or acid test ratio measures a firm's ability to use quick assets like cash to pay current liabilities immediately, excluding inventory from current assets. Both ratios above 1 indicate a company can meet short-term obligations, while ratios below 1 suggest potential issues with liquidity. The document provides an example calculation of both ratios.
Debt equity ratio
This document discusses the concepts of debt, equity, and debt-to-equity ratio. It explains debt as fees paid to teachers for their knowledge and guidance, similar to the debts companies take from banks. Equity is compared to the contributions of parents, who do not charge fees but see their children's success as their returns, just as company investors' returns come from profits. The debt-to-equity ratio measures a company's debt obligations relative to equity investments, with higher ratios indicating more debt and risk.
Ratio analysis techniques
This document provides an overview of various ratio analysis techniques used to evaluate the financial health and performance of a business. It discusses liquidity ratios, profitability ratios, financial leverage ratios, operating performance ratios, and investment valuation ratios. For each type of ratio, it provides examples of specific ratios calculated along with their formulas and what they measure. The ratios are used to analyze a company's ability to meet short-term obligations, manage costs and expenses, utilize assets, leverage debt, generate revenue, and determine stock valuation.
The buying back of shares increases the company’s gearing ratio, my point of ...
The buying back of shares increases the company’s gearing ratio, my point of ...Francesco Merone MBA
Shire Plc is a biopharmaceutical company that used cash flows to buy back shares, increasing its gearing ratio in percentage but not in real terms. The author analyzes Shire's 2012-2013 financial reports to examine the impact. In 2012, Shire had $3.1 billion in equity with a cost of capital of 12%. In 2013, Shire bought back $500 million worth of shares at $29.19 per share, reducing its equity by 3% to $3 billion. While buybacks increase gearing, some argue they maximize value when shares are undervalued and cash has no better use. The analysis focuses on how financial strategies like buybacks impact metrics like gearing and WACC.Liquidity analysis
Its the analysis about the liquidity of the firm that how do we calculate and analyze the liquidity ratios.
Solvency ratio formula
Solvency Ratio Formula...
This presentation is about the ‘solvency ratio formula‘ and is written by Russell Bowyer. This subject is one that I’ve had experience within my own company and in helping other entrepreneurs in business.
The following headings are discussed in this power point presentation:
- What is the Definition of the Solvency Ratio Formula?
- Solvency Problems are Stressful for Company Directors.
- So What is the Solvency Ratio Formula? Includes an example of using the formula.
- What is Considered to be a Good Solvency Ratio?
- 20% is a Guide Only. Other Factors That Affect Company Solvency.
- There are Additional Solvency Ratios to Keep Track of.
- Interest Cover Ratio.
- Liquidity Ratios: Including Current Ratio & Quick Ratio
- Introducing the 5 Pillars of Solvency and the Solvency Ratio Formula Info-graphic.
Partners Healthcare Case Analysis
Partners Healthcare is a not-for-profit healthcare system in Massachusetts with dozens of partner organizations. It has a centralized investment council that manages several investment pools, including a short-term pool (STP) and long-term pool (LTP). The LTP previously consisted of domestic and foreign equities and long-term bonds. The council is now considering adding real assets like REITS and commodities to the LTP.
Analyzing the addition of these real assets shows that including REITS or commodities each improve the risk-return profile compared to the baseline LTP. When considering an investor with lower risk tolerance, REITS provide a better risk-return tradeoff than commodities when added to the
Market test ratios
financial accounting - management accounting - financial management - analysis and interpretation of financial statement
Investment Valuation 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
HealthCare Word Sheet
The document discusses portfolio management of Partners Healthcare's long term investment pool. It analyzes including real assets like real estate investment trusts (REITs) and commodities to diversify risk and boost returns. Mean-variance analysis of different asset mixes shows portfolios including REITs and commodities achieve higher expected returns with lower risk than the baseline mix or portfolios with just one real asset. The recommendation is to incorporate real assets into the long term investment pool to improve the risk-return profile.
Comprehensive Ratio Analysis
This document provides a comprehensive overview of ratio analysis for financial statements. It defines three key elements of ratio analysis as profitability, efficiency, and leverage. Numerous profitability, efficiency, liquidity, and leverage ratios are defined and their calculations explained. The document also discusses how ratios can be used by potential investors to evaluate companies and introduces models for determining intrinsic stock value like the capital asset pricing model and dividend discount model.
Solvency ratio analysis
This document analyzes various solvency ratios for a company over three years from 2012-2014. It defines solvency ratios as ratios that establish relationships between current assets and current liabilities to measure a company's ability to meet its short-term obligations. The document then examines key solvency ratios for the company, including the current ratio, quick ratio, total debt ratio, debt equity ratio, and interest coverage ratio over the three year period. For each ratio, it provides the specific calculations and interprets what the ratios indicate about the company's solvency and use of debt financing.
Ratio Analysis
The document discusses various types of ratios used in ratio analysis for evaluating the financial performance and position of a business. It provides definitions and interpretations for liquidity ratios like current ratio and quick ratio, solvency ratios like debt-equity ratio and proprietary ratio, activity ratios like stock turnover ratio and debtor turnover ratio, and profitability ratios like gross profit ratio, net profit ratio, and return on capital employed. Formulas and ideal ratios are given for each type of financial ratio.
Ratio analysis
This document provides an analysis of various financial ratios for a company over two years. It begins with an introduction to ratio analysis and its importance. It then calculates and interprets various ratios including current ratio, debt to equity ratio, net profit margin, gross profit margin, inventory turnover, debtors turnover, creditors turnover and return on capital employed. The analysis found that the current ratio and return on capital employed increased slightly but debt to equity ratio also increased, indicating less financial stability. Profit margins were low. Inventory turnover and creditors turnover decreased. The conclusion recommends the company improve utilization of assets, pricing strategies and timely payment of creditors.
More Related Content
What's hot
Cash Coverage | Finance
Coverage Ratio establishes relationship between the company’s financial obligations with the available resources to pay them off. In simple terms, it measures the ability to repay the liabilities of an entity. Copy the link given below and paste it in new browser window to get more information on Cash Coverage:- http://www.transtutors.com/homework-help/corporate-finance/financial-statement-analysis/ratio-analysis/long-term-solvency-measures/cash-coverage/
Ratio analysis
Ratio analysis is a method of expressing the relationships between financial statement elements. It is used to evaluate a firm's performance, strengths, weaknesses, and ability to meet obligations. Ratios can be classified into liquidity, capital structure, turnover/activity, and profitability. Liquidity ratios measure short-term debt paying ability, capital structure ratios measure financial risk, turnover ratios measure asset use efficiency, and profitability ratios measure profit generation. Ratio analysis allows stakeholders to assess the firm's performance, financial condition, and risk.
Leverage ratios
This document discusses various leverage ratios that can be used to measure how leveraged or indebted a company is. It defines leverage ratios as ratios that measure how much debt a company is using compared to its equity. It then lists some common leverage ratios including debt-equity ratio, interest coverage ratio, debt service coverage ratio, and debt ratio. For each ratio, it provides the formula and an example calculation to illustrate how to use the ratio. The document emphasizes that leverage ratios indicate a company's ability to repay its long-term debts and service the interest on its debt. Too much debt can make a company riskier and more vulnerable to changes in interest rates.
Liquidity ratio
The document analyzes various liquidity ratios for a company from 2007-2011. It defines liquidity ratios as ratios that measure a company's ability to meet short-term debt obligations. It then calculates and interprets the current ratio, quick ratio, absolute liquid ratio, and inventory to working capital ratio for each year. The ratios show fluctuating trends over the years, with some ratios highest in 2008 and others lowest in 2007, indicating insufficient liquidity and an inability to meet short-term obligations based on standard thresholds.
Liquidity ratio By- Deepak Madan (M.com, B.ed)
This document discusses accounting ratios, specifically liquidity ratios. It defines liquidity ratios as ratios that assess a firm's ability to pay current liabilities. Two key liquidity ratios are discussed in detail:
The current ratio compares current assets to current liabilities and measures a firm's ability to pay off current debts with current assets. A ratio of 2:1 is generally considered adequate.
The quick ratio compares more liquid current assets (excluding inventory and prepaid expenses) to current liabilities and measures a firm's ability to pay current debts within a month. A ratio of 1:1 is generally considered adequate.
The document provides the detailed formulas and interpretations of these two important liquidity ratios.
Financial accounting
Introduction to ratio analysis by Owusu Attakorah HND Automotive Engineering, BSc (Hons) Mechatronics Engineering, MBA.
Ratio Analysis
The document discusses ratio analysis for financial accounting. It defines various types of financial ratios including profitability, liquidity, efficiency, capital structure, and investment ratios. For each ratio type, it provides the calculation formula and explains how to interpret the results. The key points are to identify appropriate ratios, calculate and evaluate them, and use ratios to analyze a company's performance over time and compare to industry benchmarks. Ratios have limitations but can provide insights into a business's financial health and efficiency.
Slbc100 assignment 1 ratio analysis - collaborate session - tp1 2014 (1)
This document provides instructions for a ratio analysis assignment due on May 19, 2014. Students are required to calculate 11 financial ratios for the years 2010, 2012 and 2012 using the company's data. The ratios must be grouped under profitability, efficiency, liquidity and capital structure headings. Students must show the calculations and formulas in an appendix. In the main report, students must discuss the significance of each ratio, trends over time and how the ratios would influence a bank's decision to approve or decline a loan application for the company. The report must follow a specified structure and word limit. Detailed descriptions and examples of how to calculate and interpret each ratio are provided.
Liquidity ratios
The document discusses liquidity ratios, which analyze a firm's short-term financial position and ability to meet current liabilities with current assets. It defines the current ratio as current assets divided by current liabilities, with 1.5:1 typically considered satisfactory. The quick or acid test ratio measures a firm's ability to use quick assets like cash to pay current liabilities immediately, excluding inventory from current assets. Both ratios above 1 indicate a company can meet short-term obligations, while ratios below 1 suggest potential issues with liquidity. The document provides an example calculation of both ratios.
Debt equity ratio
This document discusses the concepts of debt, equity, and debt-to-equity ratio. It explains debt as fees paid to teachers for their knowledge and guidance, similar to the debts companies take from banks. Equity is compared to the contributions of parents, who do not charge fees but see their children's success as their returns, just as company investors' returns come from profits. The debt-to-equity ratio measures a company's debt obligations relative to equity investments, with higher ratios indicating more debt and risk.
Ratio analysis techniques
This document provides an overview of various ratio analysis techniques used to evaluate the financial health and performance of a business. It discusses liquidity ratios, profitability ratios, financial leverage ratios, operating performance ratios, and investment valuation ratios. For each type of ratio, it provides examples of specific ratios calculated along with their formulas and what they measure. The ratios are used to analyze a company's ability to meet short-term obligations, manage costs and expenses, utilize assets, leverage debt, generate revenue, and determine stock valuation.
The buying back of shares increases the company’s gearing ratio, my point of ...
The buying back of shares increases the company’s gearing ratio, my point of ...Francesco Merone MBA
Shire Plc is a biopharmaceutical company that used cash flows to buy back shares, increasing its gearing ratio in percentage but not in real terms. The author analyzes Shire's 2012-2013 financial reports to examine the impact. In 2012, Shire had $3.1 billion in equity with a cost of capital of 12%. In 2013, Shire bought back $500 million worth of shares at $29.19 per share, reducing its equity by 3% to $3 billion. While buybacks increase gearing, some argue they maximize value when shares are undervalued and cash has no better use. The analysis focuses on how financial strategies like buybacks impact metrics like gearing and WACC.Liquidity analysis
Its the analysis about the liquidity of the firm that how do we calculate and analyze the liquidity ratios.
Solvency ratio formula
Solvency Ratio Formula...
This presentation is about the ‘solvency ratio formula‘ and is written by Russell Bowyer. This subject is one that I’ve had experience within my own company and in helping other entrepreneurs in business.
The following headings are discussed in this power point presentation:
- What is the Definition of the Solvency Ratio Formula?
- Solvency Problems are Stressful for Company Directors.
- So What is the Solvency Ratio Formula? Includes an example of using the formula.
- What is Considered to be a Good Solvency Ratio?
- 20% is a Guide Only. Other Factors That Affect Company Solvency.
- There are Additional Solvency Ratios to Keep Track of.
- Interest Cover Ratio.
- Liquidity Ratios: Including Current Ratio & Quick Ratio
- Introducing the 5 Pillars of Solvency and the Solvency Ratio Formula Info-graphic.
Partners Healthcare Case Analysis
Partners Healthcare is a not-for-profit healthcare system in Massachusetts with dozens of partner organizations. It has a centralized investment council that manages several investment pools, including a short-term pool (STP) and long-term pool (LTP). The LTP previously consisted of domestic and foreign equities and long-term bonds. The council is now considering adding real assets like REITS and commodities to the LTP.
Analyzing the addition of these real assets shows that including REITS or commodities each improve the risk-return profile compared to the baseline LTP. When considering an investor with lower risk tolerance, REITS provide a better risk-return tradeoff than commodities when added to the
Market test ratios
financial accounting - management accounting - financial management - analysis and interpretation of financial statement
Investment Valuation 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
HealthCare Word Sheet
The document discusses portfolio management of Partners Healthcare's long term investment pool. It analyzes including real assets like real estate investment trusts (REITs) and commodities to diversify risk and boost returns. Mean-variance analysis of different asset mixes shows portfolios including REITs and commodities achieve higher expected returns with lower risk than the baseline mix or portfolios with just one real asset. The recommendation is to incorporate real assets into the long term investment pool to improve the risk-return profile.
Comprehensive Ratio Analysis
This document provides a comprehensive overview of ratio analysis for financial statements. It defines three key elements of ratio analysis as profitability, efficiency, and leverage. Numerous profitability, efficiency, liquidity, and leverage ratios are defined and their calculations explained. The document also discusses how ratios can be used by potential investors to evaluate companies and introduces models for determining intrinsic stock value like the capital asset pricing model and dividend discount model.
What's hot (19)
Slbc100 assignment 1 ratio analysis - collaborate session - tp1 2014 (1)
Slbc100 assignment 1 ratio analysis - collaborate session - tp1 2014 (1)
The buying back of shares increases the company’s gearing ratio, my point of ...
The buying back of shares increases the company’s gearing ratio, my point of ...
Viewers also liked
Solvency ratio analysis
This document analyzes various solvency ratios for a company over three years from 2012-2014. It defines solvency ratios as ratios that establish relationships between current assets and current liabilities to measure a company's ability to meet its short-term obligations. The document then examines key solvency ratios for the company, including the current ratio, quick ratio, total debt ratio, debt equity ratio, and interest coverage ratio over the three year period. For each ratio, it provides the specific calculations and interprets what the ratios indicate about the company's solvency and use of debt financing.
Ratio Analysis
The document discusses various types of ratios used in ratio analysis for evaluating the financial performance and position of a business. It provides definitions and interpretations for liquidity ratios like current ratio and quick ratio, solvency ratios like debt-equity ratio and proprietary ratio, activity ratios like stock turnover ratio and debtor turnover ratio, and profitability ratios like gross profit ratio, net profit ratio, and return on capital employed. Formulas and ideal ratios are given for each type of financial ratio.
Ratio analysis
This document provides an analysis of various financial ratios for a company over two years. It begins with an introduction to ratio analysis and its importance. It then calculates and interprets various ratios including current ratio, debt to equity ratio, net profit margin, gross profit margin, inventory turnover, debtors turnover, creditors turnover and return on capital employed. The analysis found that the current ratio and return on capital employed increased slightly but debt to equity ratio also increased, indicating less financial stability. Profit margins were low. Inventory turnover and creditors turnover decreased. The conclusion recommends the company improve utilization of assets, pricing strategies and timely payment of creditors.
Basic Accounting Ratio Analysis Assignment Brief
This document provides instructions for a group assignment on financial ratio analysis. Students must form groups of up to 3 members, select a publicly traded company, analyze the company's financial ratios over the past 2 years, and make an investment recommendation. The report is limited to 1500 words excluding references and appendices. It will be assessed based on the background provided on the company, accurate calculation of ratios, interpretation of ratios, and justification for the investment recommendation. Additional guidelines and assessment criteria are provided.
Basic Accounting Assignment Ratio Analysis
This document provides an analysis of the financial ratios of LTKM Berhad, a Malaysia-based investment holding company, for the years 2013-2014. The profitability ratios show improved performance from 2013 to 2014, with returns on equity increasing from 7.4% to 19.4% and net profit margins rising from 6.2% to 15.9%. Some stability ratios declined slightly over this period, such as working capital ratio decreasing from 2.4:1 to 1.8:1. However, the overall financial analysis indicates good profitability and growth for the company from 2013 to 2014.
Ratio analysis ppt @ bec doms bagalkot mba
Ratio analysis involves calculating financial ratios to evaluate key aspects of a business's performance, including liquidity, investment potential, financial leverage, profitability, and asset efficiency. The ratios are grouped into five main areas and can identify strengths and weaknesses to aid decision making. Common ratios include the current ratio and acid test for liquidity, return on capital employed for profitability, and stock and debtor turnover for asset efficiency.
Profitibility ratio By- Deepak Madan (M.com, B.ed)
This document discusses various profitability ratios that can be used to measure the profitability of a company. It defines ratios such as gross profit ratio, operating ratio, operating profit ratio, net profit ratio, and return on investment. For each ratio, it provides the meaning, formula, and significance. The ratios measure aspects of profitability like the relationship between profits and revenues, the extent of revenue absorbed by costs, and the overall profitability of a business relative to capital employed.
Turnover and profitability ratio
introduction of profitibility and turnover ratio and types of these ratios, advantages and disadvantages of theses ratios
accounts ppt on ratio analysis
This document defines and discusses various types of ratio analysis used in accounting. It begins by defining a ratio as a mathematical relationship between two quantitative figures. It then outlines the main steps in ratio analysis and some key advantages and limitations. The rest of the document categorizes ratios in several ways: by financial statements, by intended users, by relative importance, and by purpose/function. It provides examples of specific ratios that fall under each of these categories, such as liquidity ratios, profitability ratios, and turnover ratios. The document aims to provide an overview of the different approaches to ratio analysis in accounting.
Ratio Analysis Ppt
Ratio analysis involves calculating relationships between financial statement items to interpret a firm's financial condition and performance. Ratios can be classified into liquidity, capital structure, profitability, and activity ratios. Liquidity ratios measure short-term solvency, capital structure ratios measure long-term solvency, profitability ratios measure operating efficiency and returns, and activity ratios measure asset utilization and efficiency. Ratios are compared over time, against industry standards, or between firms to identify strengths, weaknesses, and trends.
Ratio analysis....
This document discusses various financial statement analysis concepts including ratios, tools, and purposes. It provides definitions and formulas for key ratios used to analyze liquidity (current ratio, quick ratio, cash ratio), profitability (gross profit ratio, net profit ratio, return on capital employed), and capital structure (capital gearing ratio). Ratio analysis involves calculating ratios, comparing them to standards, and interpreting the relationships between financial statement figures to evaluate a company's performance and financial position.
Ratio analysis
Ratio analysis measures relationships between financial variables to show how a firm's situation compares to its past, other firms, and the industry. Ratios are used to identify performance, standardize information, provide early warnings, and enable trend spotting. Key types of ratios include liquidity, activity, debt, and profitability. Liquidity ratios measure a firm's ability to pay obligations and include current, quick, and cash ratios. Activity ratios evaluate efficiency through measures like inventory turnover, accounts receivable period, and asset turnover.
Presentation on project report
This document provides a ratio analysis of Kutwal Foods Pvt. Ltd., an Indian food manufacturing and trading company. It includes the company profile, objectives of the analysis, research methodology used, data interpretation and key findings. The analysis found that the company's gross and net profit ratios have been decreasing in recent years due to rising material costs and low sales margins. It recommends that the company improve its profitability by reducing expenses and utilizing resources more efficiently.
Viewers also liked (13)
Profitibility ratio By- Deepak Madan (M.com, B.ed)
Profitibility ratio By- Deepak Madan (M.com, B.ed)
Similar to Solvency ratio By Deepak Madan (Mcom B.ed)
08 ratio
Here are the key ratios calculated from the financial information provided:
1. Tangible Net Worth for 2005-06: Capital (300) + Reserves (140) - Goodwill (50) = 390
2. Current Ratio for 2006-07: Current Assets (170 + 30 + 170 + 20 + 240 + 190) / Current Liabilities (580 + 70 + 80 + 70) = 820/800 = 1.02
3. Debt Equity Ratio for 2005-06: Total Debt (Bank Term Loan 320 + Unsec. Long Term Loan 150) / Tangible Net Worth (390) = 470/390 = 1.2
Ratio analysis ppt @ bec doms bagalkot
Ratio analysis is an important tool for financial analysis that allows assessment of key financial metrics like liquidity, profitability, solvency, and risk. It involves calculating and analyzing relationships between items and groups of items from financial statements. Common ratios used in ratio analysis include the current ratio, quick ratio, debt-equity ratio, and profitability ratios. Ratio analysis is useful for lenders in evaluating the financial position, performance, strengths, and weaknesses of a business. It provides insights into the liquidity, operational efficiency, and credit risk of companies.
22244718ratioanalysisppt 12638286824297-phpapp02
Ratio analysis is a method used to interpret financial statements and assess the strengths and weaknesses of a firm. Ratios measure the relationship between different financial metrics and can be used to compare performance over time, between firms, or against standards. Key types of ratios include liquidity, capital structure, profitability, and activity ratios which analyze different aspects of a firm's financial health and operations. Calculating ratios on its own does not provide value; analysis and comparison are required to draw meaningful conclusions.
Ratio analysis
This document discusses ratio analysis, which involves calculating and presenting relationships between financial statement items. Ratios are used to interpret financial statements and assess a firm's strengths/weaknesses, historical performance, and current financial condition. The document categorizes ratios into liquidity, capital structure/leverage, profitability, and activity ratios. It provides definitions and calculations for key ratios within each category such as current ratio, debt-to-equity ratio, net profit margin, inventory turnover ratio, and discusses how ratios can be used for analysis and comparison purposes.
Ratio analysis
Ratio analysis is an important tool for financial analysis that involves calculating and analyzing relationships between key financial data points from statements. It helps assess a company's liquidity, profitability, solvency, financial stability, and risk. When using ratios, it is important to compare the same company over multiple years, against industry benchmarks, and be aware of factors like accounting differences that could distort comparisons. Key ratios include current ratio, acid test ratio, debt-equity ratio, proprietary ratio, and gross profit ratio.
Ratio analysis
This document discusses various financial ratios used for analyzing the financial statements of a business. It begins by defining key components of a balance sheet such as assets, liabilities, equity, current assets and current liabilities. It then explains over 20 different types of financial ratios categorized as liquidity ratios, activity ratios, leverage ratios, profitability ratios and market ratios. Specific formulas to calculate ratios such as current ratio, debt equity ratio, return on equity, earnings per share etc. are provided. Several examples are given to showcase calculation of various ratios from sample financial statement information. The document serves as a comprehensive reference guide for understanding and analyzing important financial ratios.
Ratio analysis mf h
This document provides information on ratio analysis including its definition, purpose, types of ratios, and how they are calculated and interpreted. Ratio analysis is a technique used to analyze financial statements and evaluate the performance, financial position, and viability of a business entity. It involves calculating various financial ratios using data from the income statement, balance sheet, and cash flow statement, and comparing them over time and against industry benchmarks to gain insight into the entity's profitability, liquidity, leverage, and operating efficiency. The document outlines various financial ratios that can be computed such as the current ratio, quick ratio, debt-to-equity ratio, and discusses how ratios are expressed and important considerations in their use and interpretation.
RATIO ANALYSIS.ppt
This document provides information on ratio analysis for financial statement evaluation. It defines various types of ratios including liquidity, activity, profitability, leverage and market ratios. Specific ratios discussed include current ratio, quick ratio, debt-equity ratio, gross profit ratio, return on equity, earnings per share and price-earnings ratio. The purpose, calculation and ideal levels of these ratios are explained. Sample balance sheet formats and ratio calculations are also presented to illustrate the concepts.
05 financial concepts
Ratio analysis is used to evaluate a company's financial health and performance. Ratios are calculated using numbers from financial statements and compared over time and against industry benchmarks. The document discusses various types of ratios like liquidity, profitability, and solvency ratios and their formulas and interpretations. It also covers the uses and limitations of ratio analysis as well as break-even analysis which is used to evaluate sales volumes required to cover costs and make a profit.
Financial ratios
financial accounting- management accounting - financial management - analysis and interpretation of financial statements - ratio anaysis
Ratio Analysis By- Ravi Thakur From CMD
Ratio analysis is a technique used to analyze financial statements and evaluate the performance, financial position, and cash flows of a business or corporation. Ratios can be used to compare a company's performance over several years, compare a company to other companies, and assess its operating and financial efficiency. Some key points covered in the document include:
- Ratio analysis involves calculating and interpreting various financial ratios to analyze trends, evaluate performance, assess risk, and make comparisons.
- Common types of ratios include liquidity ratios, leverage ratios, activity ratios, and profitability ratios.
- Ratio analysis helps lenders and others evaluate a company's liquidity position, profitability, solvency, financial stability, management quality, and risk.
Lecture 5 liabilities
Liabilities are obligations to transfer assets or provide services to other entities in the future as a result of past transactions. They are measured at their current cash equivalent value, with current liabilities due within one year and noncurrent liabilities due after. Accruals build up amounts in liability accounts over time for things like interest, wages, and deferred revenues where cash is received before being earned. Bonds payable are long-term debt that make periodic interest payments and pay par value at maturity. Companies consider ratings and market rates when issuing bonds to manage cash flows. Off-balance sheet liabilities include contingent liabilities, operating leases, and liabilities held in special purpose entities.
vluation of bond.pptx
Here are the calculations for the bond prices:
1) 5%, 5-year bond
A = Coupon payment per year = 5% of par value = 0.05
R = Market interest rate = 8% = 0.08
n = Time to maturity in years = 5
F = Par/face value (assumed to be $100) = $100
P = (0.05 x [1 - (1/(1+0.08)^5)]) + (100/(1+0.08)^5)
= (0.05 x [1 - 0.7421]) + (100 x 0.7421)
= 0.0125 + $74.21
=
Ratio analysis
It is an analysis of strength and weakness of an organisation by establishing the quantitative relation among the items of Balance Sheet or Income Statement of such an organisation
R C F,Prashant V V
The document provides an overview of ratio analysis, fund flow statements, and cash flow statements. It discusses various types of ratios like liquidity ratios, leverage ratios, and activity ratios. It explains key liquidity ratios like current ratio, quick ratio, and cash ratio. It also discusses leverage ratios like debt ratio and debt-equity ratio. The document then covers activity or turnover ratios and provides formulas for inventory turnover ratio and assets turnover ratio. It defines a fund flow statement and cash flow statement and discusses their purpose and limitations.
Ratio download
The document discusses various types of financial ratios used in ratio analysis. It defines ratios and explains their calculation and significance. The key ratios discussed are:
1. Liquidity ratios like current ratio and quick ratio, which measure a firm's ability to meet short-term obligations.
2. Leverage or capital structure ratios like debt-to-equity ratio and debt-to-total funds ratio, which assess long-term solvency.
3. Activity or turnover ratios like inventory turnover and debtors turnover, which evaluate efficiency of resource use.
4. Profitability ratios like gross profit ratio and return on equity, which examine profit generation.
The document provides formulas and interpretations
Debt and preffered stock finacing
debt and preferred stock both are sources of long term financing. this slide covered all the topic related to debt and preferred stock financing
Credit Union Key Ratios
Ratios are relatively unimportant in isolation. For maximum value, we should monitor trends (e.g., ratio this quarter compared to the previous quarter) and compare our ratios to peer averages or another type of benchmark (i.e., ratio compared to other credit unions with similar characteristics).
What is solvency ratio.pdf
A performance indicator for assessing a company’s capacity to fulfil its long-term financial obligations is the solvency ratio. The solvency ratio is a key factor in determining a developer’s financial health and capacity to execute a project in real estate investments.
Bank ratios
This document discusses several key financial ratios used to evaluate banks and other financial institutions. It provides definitions and formulas for ratios related to capital adequacy, asset quality, profitability, and liquidity. Specifically, it covers ratios such as the capital adequacy ratio, tier 1 capital ratio, loan loss reserves to gross loans average, net loans to total deposits, return on equity, return on assets, and others. Formulas and components of each ratio like equity reserves, risk-weighted assets, and pre-tax profits are also defined.
Similar to Solvency ratio By Deepak Madan (Mcom B.ed) (20)
Recently uploaded
How to Manage Your Lost Opportunities in Odoo 17 CRM
Odoo 17 CRM allows us to track why we lose sales opportunities with "Lost Reasons." This helps analyze our sales process and identify areas for improvement. Here's how to configure lost reasons in Odoo 17 CRM
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Aberdeen
Community pharmacy- Social and preventive pharmacy UNIT 5
Covered community pharmacy topic of the subject Social and preventive pharmacy for Diploma and Bachelor of pharmacy
How to Build a Module in Odoo 17 Using the Scaffold Method
Odoo provides an option for creating a module by using a single line command. By using this command the user can make a whole structure of a module. It is very easy for a beginner to make a module. There is no need to make each file manually. This slide will show how to create a module using the scaffold method.
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...Dr. Vinod Kumar Kanvaria
Exploiting Artificial Intelligence for Empowering Researchers and Faculty,
International FDP on Fundamentals of Research in Social Sciences
at Integral University, Lucknow, 06.06.2024
By Dr. Vinod Kumar KanvariaPengantar Penggunaan Flutter - Dart programming language1.pptx
Pengantar Penggunaan Flutter - Dart programming language1.pptx
The simplified electron and muon model, Oscillating Spacetime: The Foundation...
Discover the Simplified Electron and Muon Model: A New Wave-Based Approach to Understanding Particles delves into a groundbreaking theory that presents electrons and muons as rotating soliton waves within oscillating spacetime. Geared towards students, researchers, and science buffs, this book breaks down complex ideas into simple explanations. It covers topics such as electron waves, temporal dynamics, and the implications of this model on particle physics. With clear illustrations and easy-to-follow explanations, readers will gain a new outlook on the universe's fundamental nature.
The History of Stoke Newington Street Names
Presented at the Stoke Newington Literary Festival on 9th June 2024
www.StokeNewingtonHistory.com
How to Make a Field Mandatory in Odoo 17
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
Walmart Business+ and Spark Good for Nonprofits.pdf
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
The event will cover the following::
Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
How to Setup Warehouse & Location in Odoo 17 Inventory
In this slide, we'll explore how to set up warehouses and locations in Odoo 17 Inventory. This will help us manage our stock effectively, track inventory levels, and streamline warehouse operations.
The Diamonds of 2023-2024 in the IGRA collection
A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
Recently uploaded (20)
How to Manage Your Lost Opportunities in Odoo 17 CRM
How to Manage Your Lost Opportunities in Odoo 17 CRM
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
What is Digital Literacy? A guest blog from Andy McLaughlin, University of Ab...
Community pharmacy- Social and preventive pharmacy UNIT 5
Community pharmacy- Social and preventive pharmacy UNIT 5
How to Build a Module in Odoo 17 Using the Scaffold Method
How to Build a Module in Odoo 17 Using the Scaffold Method
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Pengantar Penggunaan Flutter - Dart programming language1.pptx
Pengantar Penggunaan Flutter - Dart programming language1.pptx
The simplified electron and muon model, Oscillating Spacetime: The Foundation...
The simplified electron and muon model, Oscillating Spacetime: The Foundation...
Pride Month Slides 2024 David Douglas School District
Pride Month Slides 2024 David Douglas School District
Walmart Business+ and Spark Good for Nonprofits.pdf
Walmart Business+ and Spark Good for Nonprofits.pdf
Digital Artefact 1 - Tiny Home Environmental Design
Digital Artefact 1 - Tiny Home Environmental Design
How to Setup Warehouse & Location in Odoo 17 Inventory
How to Setup Warehouse & Location in Odoo 17 Inventory
Solvency ratio By Deepak Madan (Mcom B.ed)
- 2. Solvency Ratio Total Assets to Debt Ratio Proprietary Ratio Interest Coverage Ratio Debt Equity Ratio
- 3. Meaning It indicates the proportion of funds which are acquired by long term borrowings in comparison to shareholder’s funds Formula Debt/Equity or long term Debts/Shareholder’s Funds or Net worth Long Term Debts includes long term borrowings and long term provisions which mature after one year. Shareholder’ s Funds Includes Equity share capital and preference share capital and reserves& surplus Reserve& Surplus Include capital Reserve, Security Premium, General Reserve and Balance in Statement of Profit &Loss Significance 2:1 Debt Equity Ratio
- 4. Introduction In this ratio total assets are expressed in relation to long-term debts. It is usually expressed as pure ratio Formula Total Assets/ Debts or Long term Debts Total Assets Non-current Assets (tangible Assets+ Intangible Assets+ Non-Current Investments+ Long Term Loans & Advances)+ Current Assets Debt Long Term Borrowings + Long Term Provision Significance 1:1 or 2:1(margin of safety available to providers of long term loans. Total Assets to Debt Ratio
- 5. Introduction It indicates the proportion of total assets funded by owners or shareholders. Formula Equity/Total Assets or Shareholder’s funds/Total Assets Total Assets Discussed earlier Equity Discussed Earlier Significance depends upon business, generally higher percentage shows sound business position Proprietary Ratio
- 6. Introductio n Also termed as ‘Debt Service Ratio’. Calculated by dividing the ‘profit before charging interest and income tax by Fixed interest charges Formula PBIT/Fixed interest charges PBIT Profit Before Interest and Income Tax Fixed interest charges It includes interest on long term loans and debentures Significance 6 to 7 times is considered appropriate Interest Coverage Ratio
- 7. Test Your Knowledge Debt equity ratio of company is 2:1.state the effect of the following transactions on this ratio. Issue of preference shares By Back of its own shares by company Issue of Debentures Repayment of Bank loan Sale of Fixed assets at par Sale of fixed assets at a profit Sale of fixed assets at loss Purchase of fixed assets on log term deferred payment Basis Purchase of fixed assets on a credit of 3 months
Editor's Notes
- This ratio is calculated to ascertain the soundness of the long term financial policies of the firm