BASIC FINANCIAL STATEMENTS ANALYSIS
VERTICAL COMMON SIZE FINANCIAL STATEMENT:- IT COVERS ONE YEARS OPERATING RESULTS AND EXPRESSES EACH COMPONENT A
# ITEMS ON THE STATEMENT PRESENTED AS A PERCENTAGE OF SALES REVENUE
# LINE ITEMS ON THE BALANCE SHEET ARE PRESENTED AS A PERCENTAGE OF TOTAL ASSETS
HORIZONTAL TREND ANALYSIS
# BASE YEAR IS TAKEN AS 100%
# The D/E ratio and the DFL both measure an organization's risk
# Variation analysis analyzes how a gross profit margin, operating profit margin, or net profit margin changes as a percentage over tim
# The loss from discontinued operations consists of the gain or loss on the sale of assets plus the gain or loss from the operation of the
EQUITY = PREFERRED STOCK+COMMON STOCK+APIC+RE+RESERVES & SURPLUS
COMMON EQUITY = EQUITY - PREFERRED STOCK
CASH DIVIDEND - IS THE PORTFOLIO OF PROFIT THT PAID TO EXISTING COMMON SHARE HOLDERS IN THE FORM OF CASH
STOCK DIVIDENT - IS HE DIVIDENT THAT PAID TO EXISTING COMMON SHARE HOLDERS IN THE FORM OF SAHRE RATHER THAN CASH (P
SAME)
FINANCIAL RATIO ANALYSIS
LIQUIDITY RATIOS - ABILITY OF A FIRM TO MEET ITS SHORT TERM OBLIGATIONS BY USING ASSETS THAT ARE MOST READILY CONVE
A FIRMS LIQUIDITY ALSO REFERS TO ITS ABILITY TO SELL ASSETS QUICKLY IN ORDER TO RAISE CASH
1. CURRENT RATIO (STANDARD FOR THE CR IS 2:1 , A LOWER RATIO IS NOT GOOD)
CURRENT ASSETS / CURRENT LIABILITIES
2. QUICK OR ACID TEST RATIO (MEASURES THE ABILITY TO PAY ITS SHORT TERM DEBTS USING ITS MOST LIQUID ASSTS
QR = CASH & CASH EQUIVALENTS+CURRENT MARKETABLE SECURITES+NET AR / CL
3. CASH RATIO
CASH RATIO = CASH & CASH EQLNCE + MARKTBLE SECRTS / LC
4. CASH FLOW RATIO (MEASURES HOW MANY TIMES GREATER THE CASH FLOW GENERATED BY OPERATIONS IS THAN CURRENT LIABI
CFR = OPERATING CASH FLOW / CL
5. NET WORKING CAPITAL RATIO
WCR = NET WORKING CAPITAL / TOTAL ASSETS
LEVERAGE, CAPITAL STRUCTURE, SOLVENCY AND EARNINGS COURAGE RATIOS
LEVERAGE - REFERS TO THE POTENTIAL TO EARN A HIGH LEVEL OF RETURN RELATIVE TO THE AMOUNT OF COST EXPENDED.
SOLVENCY - A FIRM IS SOLVENT IF ITS ASSETS ARE GREATER THAN THE SUM OF ITS DEBT OBLIGATION
1. FINANCIAL LEVERAGE (MEASURES A COMPANYS USE OF DEBT TO FINANCE ITS ASSETS AND OPERATIONS
FLR = TOTAL ASSETS / TOTAL EQUITY (LOW RATIO IS GOOD)
2. DEGREE OF FINANCIAL LEVERAGE
DFL = % CHANGE IN NET INCOME / % CHANGE IN EBIT, OR DFL = EBIT / EBT
3. OPERATING LEVERAGE (MEASURES THE USE OF FIXED OPERATING COSTS TO GENERATE GREATER OPERATING PROFIT)
IT IS THE CONCEPT OF USING FIXED COST TO ITS MAXIMUM POTENTIAL. IT IS THE EXISTANCE OF FIXED COST
DOL = CM/EBIT , %CHANGE IN EBT / %CHANGE IN SALES
4. DEGREE OF TOTAL LEVERAGE (IT IS THE TOTAL OF DEGREE OF OP L & DEGREE OF FL
DOTL = CM/EBT , %CHANGE IN NI / %CHANGE IN SALES, DOPL * DOFL
,CF-FCR = OP CASH FLOW + FIXED CHARGES / FIXED CHARGES
1. FIXED CHARGE COURAGE RATIO
MEASURES THE ABILITY TO PAY FIXED EXPENSES, INTEREST, RENT, ANNUAL LEASE PAYMENT, PRINCIPAL REPAYMENT, SALARY INSURA
FCCR = EARNINGS BEFRE FIXED CHARGE & TAX / FIXED CHARGES
2. CASH FLOW TO FIXED CHARGE RATIO (MEASURES THE ABILITY TO PAY FIXED CHARGES FROM THE CASH GENERATED THROUGH NO
CF-FCR = OP CASH FLOW + FIXED CHARGES / FIXED CHARGES
3. INTEREST COURAGE RATIO / TIMES INTEREST EARNED
HIGH RATIO MEANS CO. IS ABLE TO MEET ITS OBLIGATIONS
ICR = EBIT / INTEREST
CAPITAL STRUCTURE RATIOS
1. DEBT TO TOTAL ASSET (DEBT IS TOTAL LIABILITY)
MEASURES THE PROPORTION OF ASSET FINANCED THROUGH DEBT - LOWER RATIO IS GOOD, MEANS ENOUGH ASSETS TO COVER LON
DTA RATIO = DEBT(LIABILITY) / TOTAL ASSET
2) DEBT TO EQUITY RATIO
NEASURES THE ABILITY TO PAY DEBT AND HOW WELL THE CREDITOSR ARE PROTECTED, HIGH RATIO IS RISKY
DTER = DEBT / EQUITY
3) LONG TERM DEBT TO EQUITY
LOW IS GOOD, MEANS LOW FIXED FINANCING COST THAT IS LOW INTEREST
LDER = LONG TERM DEBT / EQUITY
ACTIVITY RATIOS
1. A/R TURN OVER (MEASURES THE AVG NO. OF TIMES THAT THE RV ARE COLLECTED DURING YEAR
ARTO = CREDIT SALES / AVG RECEIVABLE
2. DAYS SALES IN RECEIVABLES/COLLECTION PERIOD (MEASURES AVERAGE TIME TAKEN TO COLLECT THE CASH OF AVERAGE RV FROM
DSR = 365 / AR TURN OVER OR AVERAGE RV / ANNUAL CR SALE PER DAY
3. INVENTORT TURN OVER RATIO (MEASURES THE AVERAGE NUMBER OF TIME THE INVENTORY IS SOLD DURING THE YEAR)
ITOR = COGS/AVG INVENTORY
4. DAYS SALES IN INVENTORY (MEASURES AVERAGE NUMBER OF DAYS TO SELL THE AVERAGE INVENTORY)
DSII = 365/INVENTORY TURN OVER , AVRG INVENTORY/COGS PER DAY
5. OPERATING CYCLE RATIO (IT INDICATES HOW QUICKLY THE COMPANY WILL RECEIVE CASH ONC INVENTORY IS ACQUIRED OR PROD
OCR = DAYS SALES IN RECEIVABLE + DAYS SALES IN INVENTORY
6. PAYABLE TURN OVER RATIO (MESURES THE AVERAGE NUMBER OF TIMES THAT THE PAYABLE FROM PURCHASE ARE PAID DURING
PTO = CREDIT PURCHASE/AVERAGE PAYABLES
7. DAYS PURCHASE IN PAYABLES/AVRG PAYMENT PERIOD (PAYMENT TERMS THAT A COMPANY HAS WITH SUPPLIERS) AVRG TIME TA
DPIP = 365 / PAYABLE TURN OVER, OR AVRG PAYABLE/CREDIT PURCASE/DAY
8. CASH CYCLE RATIO (TIME PERIOD BETWEEN WHEN A BUSINESS PAYS CASH TO ITS SUPPLIERS FOR INVENTORY AND RECEIVES CASH
THE BETTER CASH CYCLE IS THE SHORTER ONE
CASH CYCLE = DAYS SALES IN RV + DAYS SALES IN INVENTORY - DAYS PURCHASE IN PAYABLES. Ie (CASH CYCLE = OPERATING CYCLE - D
9. TOTAL ASSET TURN OVER RATIO (MEASURS THE AVRG NO OF TIMES THE TOTAL SALES OVER THE TOTAL SALES)
TATO = NET SALES/AVRG TOTAL ASSET
10. FIXED ASSET TURNOVER RATIO (MEASURES THE AVRG NUMBER OF TIMES THE TOTAL SALE OVER THE TOTAL FIXED ASSET)
FATO = NET SALES / AVRG TOTAL FIXED ASSETS
FIXED ASSET TURN OVER WILL BE GREATER THATN TOTAL ASSET TURN OVER
, PROFITABILITY RATIOS
1. GP MARGIN (MEASURES THE PERCENTAGE OF GP ON SALE)
GPM = GP/SALES*100
2. OPERATING PROFIT MARGINE (MEASURES THE PERCENTAGE OF OPERATING INCOME ON SALES)
OPM = OPERATING INCOME/SALES*100
3.NET PROFIT MARGIN (MEASURES THE PERCENTAGE OF NET PROFIT ON SALES
NPM = NET INCOME/SALES*100
RETURN ON INVESTMENT CAPITAL RATIO
THE BASE OF ABOVE RATIOS IS RETRUN ON INVESTMENT
BASIC EQUATION = INCOME / INVESTMENT (ROI IS ALSO CALLED AS ACCOUNTING RATE OF RETURN) EXPRESSED IN %
1. RETURN ON ASSET (MEASURES THE % OF RETURN THAT A FIRM OR AN INVESTR GETTING FROM INVESTMENT
ROA = INT INOME / AVG TOTAL ASSET
2. RETURN ON EQUITY RATIO (MEASURES THE % OF INCOME FROM THE EQUITY INVESTMENT OF THE FIRM
ROE = NI/AVRG EQUITY . (EQUITY INCLUEDS PREFERRED STOCK)
3. RETURN ON COMMON EQUITY (MEASURES THE % OF RETURN AVAILABLE FOR COMMON SHARE HOLDERS)
ROCE = NET INCOME - PREFERRED DIVIDENT / AVERAGE COMMON EQUITY
MARKET RATIOS
1.BASIC EARNING PER SHARE BEPS (THE ASSESMENT OF THE PROFITABILITY OF A FIRM FROM THE POINT OF COMMON SHAREHOLDE
THIS MEASURES THE PROFIT AVAILABLE TO EACH COMMON SHARES
EPS = NET INCOME - PREFERRED DIVIDENT / WA#CSO
WEIGHTED AVERAGE NO.OF COMMON SHARE OUTSTANDING
2.EARNINGS YIELD RATIO-EYR (MEASURES THE INCOME PRODUCING POWER OF ONE COMMON SHARE AT THE CURRENT MARKET PR
EYR = EPS / MARKET RICE PER SHARE
BOOK VALUE PER SHAER
BVPS = TOTAL EQUITY - PREFERRED EQUITY / NO. OF COMMON SHARES OUTSTANDING, COMMON EQUITY/NO.OF S O/S
3. MARKET TO BOOK RATIO (PRICE TO BOOK RATIO)
MBR = MARKET PRICE PER SHARE/BVPS
4. PRICE TO EARNING RATIO (INDICATES NO.OF TIMES THAT THE MARKET PRICE OVER THE EPS
PER = MARKET PRICE PER SHARE / EPS
5. PRICE TO EBITDA RATIO (USE TO ANALAYSE OP PROFITABILITY BEFOR NON OP EXPENSES AND NON CASH EXP.
PRICE TO EBITDA = MARKET PRICE PER SHARE / EBITDA PER SHARE
6. DIVIDENT PAYOUT RATIO (RELATIONSHIP BW THE EARNINGS BELONGING GO EQUITY SHARE HOLDERS AND THE DIVIDENT ACTUAL
DPR = COMMON EQUITY / INCOME AVAILABLE FOR CS, OR, COMMON DIVIDENT PER SHARE / EPS
7. DIVIDENT YIELD RATIO (RELATIONSHIP BETWEEN RETURN OF INVESTOR AND THE MARKET PRICE OF THEIR SHARE
IT IS HELPFUL FOR AN INVESTOR THOSE WHO ARE SEEKING FOR AN INVESTMENT
DYR = DIVIDENT PER SHARE / MARKET PRICE PER SHARE, OR DPR/PER
8. DILUTED EARNINGS PER SHARE-DEPS
DEPS = NET INCOME - PREFERRED DIVIDENT / DILUTED WA#CSO
Diluted waxco ennath bond common stockilek convert akiyirunnel common share o/s ennath aan .for eg: 80000 comn shr undarnu(wa
undarnu ath convert akiyirunnel waxco is 80000+20000 aakum (that is diluted waxcsco.
SUSTAINABLE GROWTH RATIO (IS THE MAXIMUM RATE OF THE GROWTH THAT A COMPANY CAN SUSTAIN WITHOUT HAVING FINANC
EQUITY
SGR = (1-DPR) * RETURN ON COMMON EQUITY
VERTICAL COMMON SIZE FINANCIAL STATEMENT:- IT COVERS ONE YEARS OPERATING RESULTS AND EXPRESSES EACH COMPONENT A
# ITEMS ON THE STATEMENT PRESENTED AS A PERCENTAGE OF SALES REVENUE
# LINE ITEMS ON THE BALANCE SHEET ARE PRESENTED AS A PERCENTAGE OF TOTAL ASSETS
HORIZONTAL TREND ANALYSIS
# BASE YEAR IS TAKEN AS 100%
# The D/E ratio and the DFL both measure an organization's risk
# Variation analysis analyzes how a gross profit margin, operating profit margin, or net profit margin changes as a percentage over tim
# The loss from discontinued operations consists of the gain or loss on the sale of assets plus the gain or loss from the operation of the
EQUITY = PREFERRED STOCK+COMMON STOCK+APIC+RE+RESERVES & SURPLUS
COMMON EQUITY = EQUITY - PREFERRED STOCK
CASH DIVIDEND - IS THE PORTFOLIO OF PROFIT THT PAID TO EXISTING COMMON SHARE HOLDERS IN THE FORM OF CASH
STOCK DIVIDENT - IS HE DIVIDENT THAT PAID TO EXISTING COMMON SHARE HOLDERS IN THE FORM OF SAHRE RATHER THAN CASH (P
SAME)
FINANCIAL RATIO ANALYSIS
LIQUIDITY RATIOS - ABILITY OF A FIRM TO MEET ITS SHORT TERM OBLIGATIONS BY USING ASSETS THAT ARE MOST READILY CONVE
A FIRMS LIQUIDITY ALSO REFERS TO ITS ABILITY TO SELL ASSETS QUICKLY IN ORDER TO RAISE CASH
1. CURRENT RATIO (STANDARD FOR THE CR IS 2:1 , A LOWER RATIO IS NOT GOOD)
CURRENT ASSETS / CURRENT LIABILITIES
2. QUICK OR ACID TEST RATIO (MEASURES THE ABILITY TO PAY ITS SHORT TERM DEBTS USING ITS MOST LIQUID ASSTS
QR = CASH & CASH EQUIVALENTS+CURRENT MARKETABLE SECURITES+NET AR / CL
3. CASH RATIO
CASH RATIO = CASH & CASH EQLNCE + MARKTBLE SECRTS / LC
4. CASH FLOW RATIO (MEASURES HOW MANY TIMES GREATER THE CASH FLOW GENERATED BY OPERATIONS IS THAN CURRENT LIABI
CFR = OPERATING CASH FLOW / CL
5. NET WORKING CAPITAL RATIO
WCR = NET WORKING CAPITAL / TOTAL ASSETS
LEVERAGE, CAPITAL STRUCTURE, SOLVENCY AND EARNINGS COURAGE RATIOS
LEVERAGE - REFERS TO THE POTENTIAL TO EARN A HIGH LEVEL OF RETURN RELATIVE TO THE AMOUNT OF COST EXPENDED.
SOLVENCY - A FIRM IS SOLVENT IF ITS ASSETS ARE GREATER THAN THE SUM OF ITS DEBT OBLIGATION
1. FINANCIAL LEVERAGE (MEASURES A COMPANYS USE OF DEBT TO FINANCE ITS ASSETS AND OPERATIONS
FLR = TOTAL ASSETS / TOTAL EQUITY (LOW RATIO IS GOOD)
2. DEGREE OF FINANCIAL LEVERAGE
DFL = % CHANGE IN NET INCOME / % CHANGE IN EBIT, OR DFL = EBIT / EBT
3. OPERATING LEVERAGE (MEASURES THE USE OF FIXED OPERATING COSTS TO GENERATE GREATER OPERATING PROFIT)
IT IS THE CONCEPT OF USING FIXED COST TO ITS MAXIMUM POTENTIAL. IT IS THE EXISTANCE OF FIXED COST
DOL = CM/EBIT , %CHANGE IN EBT / %CHANGE IN SALES
4. DEGREE OF TOTAL LEVERAGE (IT IS THE TOTAL OF DEGREE OF OP L & DEGREE OF FL
DOTL = CM/EBT , %CHANGE IN NI / %CHANGE IN SALES, DOPL * DOFL
,CF-FCR = OP CASH FLOW + FIXED CHARGES / FIXED CHARGES
1. FIXED CHARGE COURAGE RATIO
MEASURES THE ABILITY TO PAY FIXED EXPENSES, INTEREST, RENT, ANNUAL LEASE PAYMENT, PRINCIPAL REPAYMENT, SALARY INSURA
FCCR = EARNINGS BEFRE FIXED CHARGE & TAX / FIXED CHARGES
2. CASH FLOW TO FIXED CHARGE RATIO (MEASURES THE ABILITY TO PAY FIXED CHARGES FROM THE CASH GENERATED THROUGH NO
CF-FCR = OP CASH FLOW + FIXED CHARGES / FIXED CHARGES
3. INTEREST COURAGE RATIO / TIMES INTEREST EARNED
HIGH RATIO MEANS CO. IS ABLE TO MEET ITS OBLIGATIONS
ICR = EBIT / INTEREST
CAPITAL STRUCTURE RATIOS
1. DEBT TO TOTAL ASSET (DEBT IS TOTAL LIABILITY)
MEASURES THE PROPORTION OF ASSET FINANCED THROUGH DEBT - LOWER RATIO IS GOOD, MEANS ENOUGH ASSETS TO COVER LON
DTA RATIO = DEBT(LIABILITY) / TOTAL ASSET
2) DEBT TO EQUITY RATIO
NEASURES THE ABILITY TO PAY DEBT AND HOW WELL THE CREDITOSR ARE PROTECTED, HIGH RATIO IS RISKY
DTER = DEBT / EQUITY
3) LONG TERM DEBT TO EQUITY
LOW IS GOOD, MEANS LOW FIXED FINANCING COST THAT IS LOW INTEREST
LDER = LONG TERM DEBT / EQUITY
ACTIVITY RATIOS
1. A/R TURN OVER (MEASURES THE AVG NO. OF TIMES THAT THE RV ARE COLLECTED DURING YEAR
ARTO = CREDIT SALES / AVG RECEIVABLE
2. DAYS SALES IN RECEIVABLES/COLLECTION PERIOD (MEASURES AVERAGE TIME TAKEN TO COLLECT THE CASH OF AVERAGE RV FROM
DSR = 365 / AR TURN OVER OR AVERAGE RV / ANNUAL CR SALE PER DAY
3. INVENTORT TURN OVER RATIO (MEASURES THE AVERAGE NUMBER OF TIME THE INVENTORY IS SOLD DURING THE YEAR)
ITOR = COGS/AVG INVENTORY
4. DAYS SALES IN INVENTORY (MEASURES AVERAGE NUMBER OF DAYS TO SELL THE AVERAGE INVENTORY)
DSII = 365/INVENTORY TURN OVER , AVRG INVENTORY/COGS PER DAY
5. OPERATING CYCLE RATIO (IT INDICATES HOW QUICKLY THE COMPANY WILL RECEIVE CASH ONC INVENTORY IS ACQUIRED OR PROD
OCR = DAYS SALES IN RECEIVABLE + DAYS SALES IN INVENTORY
6. PAYABLE TURN OVER RATIO (MESURES THE AVERAGE NUMBER OF TIMES THAT THE PAYABLE FROM PURCHASE ARE PAID DURING
PTO = CREDIT PURCHASE/AVERAGE PAYABLES
7. DAYS PURCHASE IN PAYABLES/AVRG PAYMENT PERIOD (PAYMENT TERMS THAT A COMPANY HAS WITH SUPPLIERS) AVRG TIME TA
DPIP = 365 / PAYABLE TURN OVER, OR AVRG PAYABLE/CREDIT PURCASE/DAY
8. CASH CYCLE RATIO (TIME PERIOD BETWEEN WHEN A BUSINESS PAYS CASH TO ITS SUPPLIERS FOR INVENTORY AND RECEIVES CASH
THE BETTER CASH CYCLE IS THE SHORTER ONE
CASH CYCLE = DAYS SALES IN RV + DAYS SALES IN INVENTORY - DAYS PURCHASE IN PAYABLES. Ie (CASH CYCLE = OPERATING CYCLE - D
9. TOTAL ASSET TURN OVER RATIO (MEASURS THE AVRG NO OF TIMES THE TOTAL SALES OVER THE TOTAL SALES)
TATO = NET SALES/AVRG TOTAL ASSET
10. FIXED ASSET TURNOVER RATIO (MEASURES THE AVRG NUMBER OF TIMES THE TOTAL SALE OVER THE TOTAL FIXED ASSET)
FATO = NET SALES / AVRG TOTAL FIXED ASSETS
FIXED ASSET TURN OVER WILL BE GREATER THATN TOTAL ASSET TURN OVER
, PROFITABILITY RATIOS
1. GP MARGIN (MEASURES THE PERCENTAGE OF GP ON SALE)
GPM = GP/SALES*100
2. OPERATING PROFIT MARGINE (MEASURES THE PERCENTAGE OF OPERATING INCOME ON SALES)
OPM = OPERATING INCOME/SALES*100
3.NET PROFIT MARGIN (MEASURES THE PERCENTAGE OF NET PROFIT ON SALES
NPM = NET INCOME/SALES*100
RETURN ON INVESTMENT CAPITAL RATIO
THE BASE OF ABOVE RATIOS IS RETRUN ON INVESTMENT
BASIC EQUATION = INCOME / INVESTMENT (ROI IS ALSO CALLED AS ACCOUNTING RATE OF RETURN) EXPRESSED IN %
1. RETURN ON ASSET (MEASURES THE % OF RETURN THAT A FIRM OR AN INVESTR GETTING FROM INVESTMENT
ROA = INT INOME / AVG TOTAL ASSET
2. RETURN ON EQUITY RATIO (MEASURES THE % OF INCOME FROM THE EQUITY INVESTMENT OF THE FIRM
ROE = NI/AVRG EQUITY . (EQUITY INCLUEDS PREFERRED STOCK)
3. RETURN ON COMMON EQUITY (MEASURES THE % OF RETURN AVAILABLE FOR COMMON SHARE HOLDERS)
ROCE = NET INCOME - PREFERRED DIVIDENT / AVERAGE COMMON EQUITY
MARKET RATIOS
1.BASIC EARNING PER SHARE BEPS (THE ASSESMENT OF THE PROFITABILITY OF A FIRM FROM THE POINT OF COMMON SHAREHOLDE
THIS MEASURES THE PROFIT AVAILABLE TO EACH COMMON SHARES
EPS = NET INCOME - PREFERRED DIVIDENT / WA#CSO
WEIGHTED AVERAGE NO.OF COMMON SHARE OUTSTANDING
2.EARNINGS YIELD RATIO-EYR (MEASURES THE INCOME PRODUCING POWER OF ONE COMMON SHARE AT THE CURRENT MARKET PR
EYR = EPS / MARKET RICE PER SHARE
BOOK VALUE PER SHAER
BVPS = TOTAL EQUITY - PREFERRED EQUITY / NO. OF COMMON SHARES OUTSTANDING, COMMON EQUITY/NO.OF S O/S
3. MARKET TO BOOK RATIO (PRICE TO BOOK RATIO)
MBR = MARKET PRICE PER SHARE/BVPS
4. PRICE TO EARNING RATIO (INDICATES NO.OF TIMES THAT THE MARKET PRICE OVER THE EPS
PER = MARKET PRICE PER SHARE / EPS
5. PRICE TO EBITDA RATIO (USE TO ANALAYSE OP PROFITABILITY BEFOR NON OP EXPENSES AND NON CASH EXP.
PRICE TO EBITDA = MARKET PRICE PER SHARE / EBITDA PER SHARE
6. DIVIDENT PAYOUT RATIO (RELATIONSHIP BW THE EARNINGS BELONGING GO EQUITY SHARE HOLDERS AND THE DIVIDENT ACTUAL
DPR = COMMON EQUITY / INCOME AVAILABLE FOR CS, OR, COMMON DIVIDENT PER SHARE / EPS
7. DIVIDENT YIELD RATIO (RELATIONSHIP BETWEEN RETURN OF INVESTOR AND THE MARKET PRICE OF THEIR SHARE
IT IS HELPFUL FOR AN INVESTOR THOSE WHO ARE SEEKING FOR AN INVESTMENT
DYR = DIVIDENT PER SHARE / MARKET PRICE PER SHARE, OR DPR/PER
8. DILUTED EARNINGS PER SHARE-DEPS
DEPS = NET INCOME - PREFERRED DIVIDENT / DILUTED WA#CSO
Diluted waxco ennath bond common stockilek convert akiyirunnel common share o/s ennath aan .for eg: 80000 comn shr undarnu(wa
undarnu ath convert akiyirunnel waxco is 80000+20000 aakum (that is diluted waxcsco.
SUSTAINABLE GROWTH RATIO (IS THE MAXIMUM RATE OF THE GROWTH THAT A COMPANY CAN SUSTAIN WITHOUT HAVING FINANC
EQUITY
SGR = (1-DPR) * RETURN ON COMMON EQUITY
