Financial Statement Analysis

Market Value Metrics

Metric	Formula
Market Capitalisation	shares * price per share
Market Value Added	Market capitalisation - equity
Market to Book Ratio	Market value of equity : Book value of equity
Total Capitalization	Long term debt + equity It represents the total amount of money that has been raised to finance its operations
After tax operating income	Net income + (1 - tax) x interest expense OR EBIT x (1 - tax)
Economic Value Added	After tax operating income - (cost of capital * total capitalization)
Return on Capital (ROC)	$\frac{a f t er - t a x o p er a t in g in co m e}{t o t a l c a p i t a l i z a t i o n}$ ROC tells you how efficiently a company is using the money that investors and lenders have put into it.
Return on Assets (ROA)	$\frac{a f t er - t a x o p er a t in g in co m e}{t o t a l a sse t s}$ If a company owns factories, equipment, and cash in the bank (all assets), ROA tells you how well it’s using everything it owns to generate profit. Can also be calculated using asset turnover x operating profit margin
Return on Equity (ROE)	$\frac{n e t in co m e}{e q u i t y}$ Measures how efficiently a company turns shareholder investment into profit. It tells you, “For every $1 of shareholder money, how much profit does the company generate?”
Asset Turnover Ratio	$\frac{S a l es}{T o t a l a sse t s a t s t a r t o f ye a r}$ OR $\frac{S a l es}{A v er a g e T o t a l A sse t s}$
Inventory Turnover Ratio	$\frac{cos t o f g oo d s so l d}{in v e n t ory a t s t a r t o f ye a r}$
Average Days in Inventory	$\frac{in v e n t ory a t s t a r t o f ye a r}{cos t o f g oo d s so l d /365}$
Receivables Turnover	$\frac{s a l es}{rece i v ab l es a t s t a r t o f ye a r}$
Average Collection Period	$\frac{rece i v ab l es a t s t a r t o f ye a r}{a v er a g e d ai l y s a l es}$
Long-term debt ratio	$\frac{l o n g - t er m d e b t}{l o n g - t er m d e b t + e q u i t y}$
Long-term debt equity ratio	$\frac{l o n g - t er m d e b t}{e q u i t y}$
Total debt ratio	$\frac{t o t a l l iabi l i t i es}{t o t a l a sse t s}$
Times interest earned	$\frac{EB I T}{in t eres t p a y m e n t s}$
Cash coverage ratio	$\frac{EB I T + d e p rec ia t i o n}{in t eres t p a y m e n t s}$
Net working capital to total assets ratio	Net Working Capital is the difference between assets and liabilities
Current ratio
Quick ratio	(Current Assets - Inventory) / Current Liabilities
Cash ratio

Jonas Notes

Explorer

Financial Statement Analysis

Market Value Metrics