Financial Ratios

EBIT/IE Interest Coverage ratio

The ratio, also called the Interest Coverage Ratio, indicates the degree of coverage that the operating result can provide for the borrowing costs. This indicator is widely used by banks to monitor the financial risk of companies. The ability to meet interest payment obligations is absolutely critical to a company’s relationship with lenders. Because of […]

Financial Ratios

Equity to Assets ratio

The Equity to Assets ratio is used to determine the financial health and long-term profitability of a corporation. It is often used by investors to determine whether the corporation’s shares are a safe investment and it is a measure of solvency. Equity to Assets ratio assesses the degree of financial independence, i.e. what percentage of […]

Financial Ratios

Leverage ratio

Leverage ratio indicates a company’s ability to make use of its borrowed capital to purchase assets. This ratio is an indicator of the company’s financial leverage used to finance the firm. 

Financial Ratios

LLCR – Loan Life Coverage Ratio

It is a solvency measure, calculated over the entire life period of financial debt. It is given by the present value of Cash-flow Available for Debt Service (CFADS), increased by the cash reserve (if present) available to repay the financial debt and divided by the amount of debt owed by the company at a given time […]

Financial Ratios

Working Capital to Assets ratio

The working capital to total assets ratio compares the net liquid assets to the total assets of the firm. Working Capital is the difference between current assets and current liabilities, so the Working Capital to Total Assets ratio determines the short-term company’s solvency. 

Financial Ratios

NPV – Net Present Value

For assessing the profitability of a financial plan, the most used quantities are the NPV and the IRR. The Net Present Value (NPV) is defined as the present value of the sum of the discounted cash-flows throughout the duration of the financial plan. This indicator represents the wealth created through the project, updated to the date of […]

Financial Ratios

Quick ratio

Quick ratio measures the company’s solvency with regard to short-term liabilities. Specifically, it measures whether the company’s cash and equivalents and its trade and other receivables are sufficient to cover the short-term liabilities.The main difference with the current ratio is that quick ratio does not include inventories.   So, in this case, we don’t have […]

Financial Ratios

Return on Equity

* Profit (loss) attributable to the Owners of the Parent ** Equity attributable to the Owners of the Parent ROE measures the overall profitability of the Equity capital invested in the company and provides a benchmark to evaluate alternative investments. ROE indicates the return on capital invested by the shareholders or by the entrepreneur. In other words, […]

Financial Ratios

ROCE – Return on Capital Employed

* (Total Assets-Current Liabilities); Very interesting to understand the evolution of the enterprise is the ROCE, a measure of the profitability of all capital invested (the loan capital as well). As a result, it represents the return obtained by all investors of the company. Investors often calculate ROCE based on ‘Average Capital Employed,’ which takes the average of […]

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