Question

Make sure to use the "Close" column not the adjusted close on the date of the relevant financial statement.

How do you calculate these ratios with Income Statement, Balance sheet, and Cash Flows?

a. Price/Earnings

b. Enterprise Value / EBITDA

c. Market to Book Equity Ratio

d. Enterprise Value / Book Assets

e. Total Asset Turnover

f. Receivables Turnover

g. Average Collection Period

h. Profit Margin

f. Equity Multiplier

g. Return on Assets

h. Return on Equity

Answer 1

ans:

(a) Price / Earnings ratio = Company current stock price / Earning per share ( take it form income statement)

(b) Enterprise value / EBITDA = Market capitalization + preferred share + minority shares + debt - total cash / ( Earning before interest , taxes, depreciation and amortization

(c) Market to book equity ratio = market price of share / book value per share

(d) Enterprise Value / Book Assets = Market capitalization + preferred share + minority shares + debt - total cash / ( book value of all the assets)

(e) Total Asset Turnover = Net sales / Total assets

(f) Receivables Turnover = average receivable / net credit sales

(g) Average Collection Period = average receivable / net credit sales * number of days

(h) Profit Margin ,

gross Profit Margin = gross profit / total sales

net Profit Margin = Net profit / total sales

f. Equity Multiplier = total assets / total equity

g. Return on Assets = Net Income / average total assets

h. Return on Equity = Net Income / total equity