Term
Profitability Analysis
Return on Assets Ratio
Measures a company’s success in
earning a return for all providers
of capital. |
|
Definition
Return on Assets Ratio
Net Income + Interest Expense, Net of Tax
--------------------
Average Total Assets |
|
|
Term
Profitability Analysis
Return on Sales Ratio
Measures earnings before
payments are made to creditors |
|
Definition
Return on Sales Ratio
Net Income + Interest Expense, Net of Tax
---------
Net Sales |
|
|
Term
Profitability Analysis
Asset Turnover Ratio
Illustrates the relationship
between net sales and average
total sales. |
|
Definition
Asset Turnover Ratio
Net Sales
---------
Average Total Assets |
|
|
Term
Profitability Analysis
Return on Common Stockholder
Equity Ratio
Measures the success of a
company earning a return for the
investors (stockholders). |
|
Definition
Return on Common Stockholder
Equity Ratio
Net Income – Preferred Dividends
---------------------------
Average Common S/H’s Equity |
|
|
Term
Profitability Analysis
Return on Assets Ratio
Measures a company’s success in
earning a return for all providers
of capital. |
|
Definition
Return on Assets Ratio
Return on Sales * Asset Turnover |
|
|
Term
Profitability Analysis
Earnings Per Share Ratio
A company’s bottom line stated on
a per-share basis. |
|
Definition
Earnings Per Share Ratio
Net Income – Preferred Dividends
--------------------------------
Weighted Average Number of Common
Shares Outstanding |
|
|
Term
Profitability Analysis
Price/Earnings Ratio
Illustrates the relationship
between a company’s
performance according to the
Income Statement and its
performance in the Stock Market. |
|
Definition
Price/Earnings Ratio
Current Market Price
--------------------
Earnings Per Share |
|
|
Term
Profitability Analysis
Dividend Payout Ratio
The percentage of earnings paid
out as dividends |
|
Definition
Dividend Payout Ratio
Common Dividends Per Share
--------------------------
Earnings Per Share |
|
|
Term
Profitability Analysis
Book Value Per Share
Represents the rights that each
share of common stock has to the
net assets of the corporation. |
|
Definition
Book Value Per Share
Total Stockholders’ Equity
--------------------------
Number of Shares of Stock Outstanding |
|
|
Term
Dividend Yield Ratio
Profitability Analysis
The relationship between
dividends and the market price of
a company’s stock |
|
Definition
Dividend Yield Ratio
Common Dividends Per Share
--------------------------
Market Price Per Share |
|
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