FINANCIAL LEVERAGE RATIO
Total Debts to Assets:
Provides information about the company's ability to absorb asset reductions arising from losses without jeopardizing the interest of creditors.
Total Assets
Capitalization Ratio:
Indicates long-term debt usage.
Formula Long-Term Debit
Long-Term + Owners Equity
Debt to Equity:
Indicates how well creditors are protected in case of the company's insolvency.
Formula Total Debt
Total Equity
Interest Coverage Ratio (Times Interest Earned):
Indicates a compaany's capacity to meet interest payments. Uses EBIT (Earnings before interest and taxes)
Formula EBIT
Interest Expense
Long-term Debt to Net Working Capital:
Provides insight into the ability to pay long term debt from current assets after paying current liabilities.
Formula Long-term Debt
Current Assets - Current Liabilities
SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO
MBA NOTES
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