## Background

The Ratios Report gives you the main performance indicators of the company and are divided into four sections:

**Liquidity Ratios****Profitability Ratios****Financial Leverage Ratios****Efficiency Ratios**

## Liquidity Ratios

**Working Capital**- Definition: The amount of capital available for day-to-day financial operations
- Formula: Currents Assets – Current Liabilities

**Current Ratio**- Definition: Measures a company’s ability to cover its short and long-term financial obligations
- A Current Ratio over
**1**is ideal - Formula: Currents Assets / Current Liabilities

## Profitability Ratios

**Net Profit Margin**__Definition:__The percentage of Revenues that are left**After**all expenses, depreciation, amortization, interests, and Taxes are deducted__Formula:__Net Profit / Net Revenue

**Return On Assets (ROA)**__Definition:__The percentage of Net Profit relative to the company’s total Assets.- The ROA demonstrates how well a company is using its assets/ resources to generate profit

__Formula__: Net Profit / Total Assets

**Operating Income Margin**- Also Referred as Earnings Before Interest, Taxes, Depreciation, Amortization or
**EBITDA Margin** __Definition:__The percentage of Revenues that are left**Before**expenses, depreciation, amortization, interests, and taxes are deducted__Formula:__Operating Income / Revenues

- Also Referred as Earnings Before Interest, Taxes, Depreciation, Amortization or
**Return On Equity (ROE)**__Definition:__The percentage of Net Income earned in comparison to the total Equity of a company. A higher the ROE means that a company is using its equity efficiently to generate profit. A ROE over 20% is considered very positive.__Formula:__Net Income / Equity

**Gross Profit Margin**__Definition:__The percentage of Profit left after deducting**Only**Cost of Goods Sold (COGS) or direct costs of operations. The Gross Profit Margin**excludes**Variable and Fixed Costs, Depreciation, Amortization, Interests, and taxes__Formula:__Gross Profit / Revenue

## Financial Leverage Ratios

**Debts To Assets**__Definition:__The percentage of the company total assets that were financed or funded by debt__Formula:__Total Liabilities / Total Assets

**Capitalization**__Definition:__The percentage of debt in a company’s total capital structure__Formula:__(Long Term Liability) / (Long Term Liability + Owner’s Equity)

**Debt To Equity**__Definition:__The percentage of debt used to finance a company’s assets relative to its equity__Formula:__Total Liabilities / Total Equity

**Debt To Working Capital**__Definition:__The percentage of debt relative to a company’s short term financial strength. It helps to determine if a company is able to meet its short term financial obligations.__Formula:__(Long Term Liability) / (Current Assets – Current Liabilities)

## Efficiency Ratios

**Cash Turnover**__Definition:__The amount of times a company’s replenished its cash account/balance. A high Cash Turnover Ratio is considered positive.__Formula:__Revenue / Cash

**Revenue (Sales) To Working Capital**__Definition:__Determines how well a company is using its cash to generate sales__Formula:__Revenue / (Current Assets – Current Liabilities)

**Fixed Asset Turnover**__Definition:__Determines how well a company is using its fixed assets to generate sales__Formula:__Revenue / Fixed Assets