CFA Level 1 Financial Ratios Sheet - AnalystPrep

Ratios measure the company s ability to meet its short-term obligations and how quickly assets are converted into cash. The following table explains how to calculate the major liquidity RatiosProfitability Ratios measure the company s ability to generate profits from its resources (assets). The table below shows the calculations of these RatiosSolvency Ratios measure a company s ability to meet long-term obligations. Subsets of these Ratios are also known as leverage and long-term debt RatiosValuation Ratios measure the quantity of an asset or flow ( , earnings) associated with ownership of a specified claim ( , a share or ownership of the enterprise). The following tables show the most of the common valuation RatiosInventory turnoverDays of inventory on hands (DOH)Receivables turnoverRevenue or Revenue f rom credit salesAverage receivablesNumber of daysReceivable turnoverPurchasesAverage payablesNumber of days in a periodPayable turnoverRevenueAverage working capitalRevenueAverage fixed assetsRevenueAverage total assetsDays of sales outstanding (DSO)Payable TurnoverNumber of days of payablesWorking capital turnoverFixed assets turnoverTotal assets turnoverActivity RatiosRatio calculationActivity Ratios measure how efficiently a company performs day-to-day tasks, such as the collection of receivables and management of inventory.

Solvency Ratios Valuation ratios measure the quantity of an asset or flow (i.e., earnings) associated with ownership of a specified claim ... Purchases Average payables Number of days in a period Payable turnover Revenue Average working capital ... conditional to the fact that the company includes interest paid in operating activities ...

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