1) company leverage : how many borrow v.s. assets

dept ratio = total liabilities / total assets

average dept ratio for large compnay : 50-60%

2) current ratio : liquidity

current ratio = current assets / current liabilities

if < 1, if company stops today, they will not have money to pay all the asset.

Bank prefer less stable companies with current ratios 2:1 or higher

3) return on sales

return on sales = net income / sales

net income = profit ( after pay for all expenses )

Average return on sales for tech companies is 20%

4) asset turnover : efficient of company

asset turnover = sales / total assets

how efficient the company use assets to generate sales

5) return on equity

return on equity = net income / equity

most companies have a return on equity between 10-20%

6) price-earnings ratio : measure of growth

price-earnings ratio = market value of shares / net income

most companies have a price-earnings ratio between 10-30

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