current ratio
ST ability of company to pay ST debt
quick ratio
measures immediate liquidity of the firm; ability to pay ST debt using most liquid assets
cash ratio
ability of firm to pay ST using cash
what are marketable securities
st investments that can turn into cash quickly at almost no loss
TIE
how many times operating profit can cover its interest expenses (“cushion” before firm starts struggling to pay vendors)
debt ratio
what percentage of assets are financed by debt
lower = safer, less dependence on debt
GPM
measures how efficiently the firm produces goods after producing what you sell (COGS), before operating costs
debt-to-equity ratio
how much debt the company uses relative to equity (determins the firms long term debt paying ability and how well creditors are protected in case of insolvency
OPM
how much revenue remains after covering COGS + operating expenses but before interest and taxes
NPM
how much each euro of sales become final profit
ROA
how efficiently the firm uses assets to generate profit
ROE
how much return shareholders are recieving for the money invested
CR targetted value
between 1.5-2 (below 1 is liquidity risk)
QR miniumum
1
CR targetted value
0.3
what do you have to consider when thinking about QR
quality of recievables
- some customers pay late
- some customers may never pay
because the quick ratio measures immediate liquidity, and only receivables that are reliable and collectible in the short term count as liquid assets
