|
|
Solvency Indicators |
Description |
|
1. |
Current Ratio |
Shows coverage of current liabilities by current assets |
|
2. |
Quick Ratio |
Shows coverage of current liabilities by cash, marketable securities and short-term receivables |
|
3. |
Cash Ratio |
Shows coverage of current liabilities by cash and marketable securities |
|
4. |
Debt to Cash Flow |
Number of annual cash flows needed to repay liabilities |
|
5. |
Days Sales Outstanding |
Shows average period for the collection of trade receivables as number of days |
|
6. |
Days Inventory Outstanding |
Shows average period of holding inventories and how efficient inventories are used as number of days |
|
7. |
Days Payables Outstanding |
Shows average period of crediting of trade payables as number of days |
|
8. |
Equity Ratio |
Shows percentage of equity in total capital. Its level is determined by a need for financing by own funds, as well as by justification of the use of borrowed capital |
|
9. |
Debt to Equity Ratio |
Shows the engagement of borrowed capital for every dinar of equity |
|
10. |
Equity to Permanent Assets Ratio |
Shows coverage of permanent assets by equity |
|
11. |
Equity and Long-term Debt to Permanent Assets Ratio |
Shows coverage of permanent assets by equity and long-term liabilities |
|
12. |
Net Working Capital to Current Assets |
Shows percent of current assets coverage by net working capital, indicates ability to maintain liquidity |
|
13. |
Interest Coverage Ratio |
Shows profit (loss) before tax plus interest paid related to interest paid, indicates risk related to the interest payment |
|
14. |
Operating Profit Margin |
Shows relation between operating profit (loss) and net sales |
|
15. |
Net Profit Margin |
Shows relation between net profit (loss) and net sales |
|
16. |
Return on Equity (ROE) after Tax |
Indicates earning power of equity after tax, showing ratio of net profit (loss) to equity |
|
17. |
Return on Assets (ROA) after Tax |
Measures productivity of assets regardless of capital structures after tax, showing net profit (loss) plus interest paid to total assets |
|
18. |
Financial Leverage Effect |
Expresses as ROE in relation to ROA. Higher ROE than ROA indicates that use of borrowed funds is justified |
|
19. |
Depreciation Expenses to Sales Ratio |
If refers to the use efficiency of engaged assets. A high value indicates an aggressive investment policy, while low value indicates the obsolescence of assets and restraint investment |