How to use Accounting Ratios to understand the Financial Performances?

What are the other ratios used in financial reporting?

Dividend Yield Ratio tells investors how much money a company gets from a stock investment. This is calculated by dividing the annual cash dividend of the stock at its current market price. This can be compared with the interest rate on high-interest debt securities, such as treasury bonds and Treasury notes, which are more secure.

Book value per share is calculated by dividing the total owner’s share by the total number of shares outstanding. While EPS is important for determining the market value of a stock, the book value of a share is less than the liability of the company’s asset liabilities. The market value of a share may be less than the book value of a share.

The Return on Equity (ROE) tells the profit of eight buses compared to the book value of its shareholders’ equity. This ratio is particularly useful for privately owned businesses that do not have a way to determine the present value of the owner’s shares. ROE is also calculated for state companies, but it plays a secondary role in other rates. ROE is calculated by dividing net income by owners’ equity.

The current ratio is a measure of the short-term solution of a business, in other words, its ability to pay off its obligations in the near future. This ratio is roughly an indicator that cash in hand and receivable accounts receivable and proceeds from sale of inventory are sufficient to pay off liabilities over the next period. It is calculated by dividing current assets by current liabilities. Businesses are expected to maintain a current ratio of at least 2: 1, which means that their current assets should be twice the current liabilities.