Operating Cash Ratio – Formula and Understanding
Unlike the other liquidity ratios that are balance sheet derived, the operating cash ratio is more closely connected to activity (income statement).
Business Ratios
Business ratios are tools used to compare similar businesses within the same industry. They are financial metrics evaluating market valuation, performance, liquidity, leverage and activity. In general, business ratios are an excellent tool to value stocks.
Operating Profit Margin – Formula and Understanding
Operating profit margin refers to the value earned as a percentage of net sales. The operating profit is often referred to as earnings before interest, taxes, depreciation and amortization, (EBITDA).
Total Assets Turnover Rate – Formula and Analysis
Within the group of activity ratios, the total assets turnover rate is the broadest in scope. Similar to other activity ratios, it utilizes net sales as the numerator.
Fixed Assets Turnover Rate
The fixed assets turnover rate is another activity ratio whereby an income statement financial characteristic is compared to a balance sheet asset section.
Working Capital Turnover
Activity ratios measure performance of a current asset on the balance sheet. The working capital turnover is the most encompassing of all the activity ratios.
Cash Ratio
The cash ratio is a much more effective tool for small business than the traditional current or quick ratio.
Accounts Receivable Turnover Ratio
One of the activity ratios in business is the receivables turnover ratio or rate; it measures the frequency of collecting the entire balance of accounts receivable.
Net Profit
No other business term is so misunderstood, misstated, misleading or deceiving as the words ‘net profit’.
Current Ratio
The current ratio is an inappropriate relationship to use or rely on in small business. The ratio is best suited for large publicly traded organizations.