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Financial Ratios Cheat Sheet (DRAFT) by

Financial ratios are used to assess the financial health and performance of a company. There are several types of financial ratios that are commonly used, which can be grouped into categories based on the aspect of the company they analyze.

This is a draft cheat sheet. It is a work in progress and is not finished yet.

Profit­ability Ratios

Return on Assets (ROA) = Net Income / Total Assets
how efficient a company's management is in generating profit from their total assets on their balance sheet
Return on Equity (ROE) = Net Income / Shareh­olders' Equity
measures the net profits generated by a company based on each dollar of equity investment contri­buted by shareh­olders
Return on Invested Capital (ROIC) = NOPAT / (BV of debt + BV of equity - cash)
a calcul­ation used to determine how well a company allocates its capital to profitable projects or invest­ments, (BV of debt + BV of equity - cash) is the same as total invested capital, also NOPAT is the same as operating income * (1-tax rate)
Return on Capital Employed (ROCE) = EBIT / Capital Employed
a ratio that provides insights into a company's efficiency in generating returns from its capital invest­ments. It takes into account both the operating profit­ability and the capital structure of a company. Capital Employed = Total Assets - Current Liabil­ities
Return on Investment (ROI) = (Net Profit / Investment Cost) * 100
a financial ratio that measures the return or profit­ability of an investment relative to its cost. It evaluates the efficiency and effect­iveness of an investment by comparing the net gain or benefit from the investment to the initial cost.
Gross Margin Ratio = (Total Revenue - COGS) / Total Revenue
it shows how much profit a company makes after paying off its cost of goods sold (COGS). The ratio indicates the percentage of each dollar of revenue that the company retains as gross profit, so naturally a high gross margin ratio is desired
Operating Profit Margin = Operating Profit / Revenue
also known as Return on Sales (ROS). a ratio that measures the company's ability to generate profits from its sales revenue. It indicates the percentage of each dollar of sales that translates into operating profit. Here's the formula for Return on Sales
Net Profit Margin = Net Income / Total Revenue
it is used to calculate the percentage of profit a company produces from its total revenue. It measures the amount of net profit a company obtains per dollar of revenue gained.
 

Liquidity Ratios

Current Ratio
Quick Ratio
Cash Ratio
Operating Cash Flow Ratio
Defensive Interval Ratio