Ratios and Definitions
 Market Price Analysis
 Profitability Analysis
 Liquidity Analysis
 Cash Flow Analysis
 Capital – Leverage Analysis
 Activity Analysis


Profitability Analysis
Measures financial performance

Return on Equity Ratio – Net income divided by average stockholders’
equity.

ROE – DuPont Formula Ratio –
Net income divided by average stockholders’ equity = (net income /
sales) times (sales / total assets) times (total assets / total
equity).

Return on Assets Ratio – Net income divided by average total assets.

Gross
Profit Margin – Gross profit divided by sales.

Operating Profit Margin – Operating profit divided by sales.

Net Profit Margin –
Net income divided by sales.

