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- Current assets
- Liabilities
- Profitability
- Working capital
Total Assets, Total Liabilities and most of all its Networth...
It may depend upon the user of the financial statements and the purpose of using the numbers. Generally speaking, a banker would see at the leverage ratio and liquidity ratios besides, the profitability. An owner is interested in the growth in bottom line and networth growth. A potential partner may see the sales trend and operating capabilities of the business and extrapolate the same into future.
- Cash Flow Per Share = (Cash Flow from Operations - Dividends on Preferred Stock)/Common Shares Outstanding.
- Cash Flow to Maturing Debt = Cash Flow from Operations\\Current Debt Maturities.
- Cash Flow to Total Debt = Cash Flow from Operations\\Total Debt.
Each of these metrics offers a unique insight into a company's financial health.
Profitability is the ability of a business to earn profit over a period of time.The profitability ratios show the combined effects of liquidity, asset management (activity) and debt management (gearing) on operating results. The overall measure of success of a business is the profitability which results from the effective use of its resources.
1. Gross profit Margin
2 Operating Profit Margin
3. Net Profit Margin
4. Return on Assets
5. Return of Equity
6. Return on Capital Employed
These ratios look at how well a company turns its assets into revenue as well as how efficiently a company converts its sales into cash, i.e how efficiently & effectively a company is using its resources to generate sales and increase shareholder value. The better these ratios, the better it is for shareholders.
1. Fixed Asset turnover=Sales/Net Fixed assets
2. Average collection period=(Account receivable / annual credit sales)*365
3. Inventory Turnover=sales/avg inventory
4. Total Asset Turnover=Sales/ total assets
Among the key numbers (mentioned above) I also look at keenly:
1. Reserves - revaluation, premium and goodwill
2. Recievables / Bad debts and
3. Sales Ratios, espcially OPM and NPM
