INVESTMENT STRATEGIES - Investment Ratios

Investment Ratios.

Profit Margin
= operating profit x 100 / turnover

Return on Capital Employed
= operating profit x 100 / total capital employed

Sales as a Multiple of Capital Employed
= sales or turnover / capital employed

Stockturn
= sales or turnover / year-end stocks

Debt Collection
= trade debtors / sales x 365

Payment of Trade Creditors
= trade creditors / sales x 365

Cash-to-Cash Cycle
= stock days + debtor days - creditor days

Gearing Percentage
= total liabilities x 100 / shareholders' funds

Interest Cover
= net profit / interest paid

Current Ratio
= current assets / current liabilities

Quick Ratio
= current assets - stocks / current liabilities

Earnings Per Share (EPS)
= earnings / number of shares in issue

Price/Earnings Ratio (PE)
= current market price of share / EPS

Price to Earnings Growth Factor (PEG)
= prospective PE / estimated future growth in EPS

Dividend Per Share
= dividend paid / number of ordinary shares in issue

Dividend Yield
= dividend per share x 100 / share price

Dividend Cover
= earnings per share / dividend per share

Net Asset Value (NAV)
= current assets - current liabilities

Net Asset Value per Share
= net asset value / number of shares in issue

Price to Sales Ratio
= share price / sales per share or market cap / total sales

Price to R & D Ratio
= market capitalisation / R&D expenditure

Price to Book Value
= share price / asset value or market cap / total net assets

Debt/Equity
= net borrowings x100 / shareholders funds

EPS Growth
= (Prospective EPS – Historical EPS) * 100 / Historical EPS

Free Cash Flow
= operating profit + depreciation +/- change in working capital – cash interest
payments – cash taxes – maintenance expenditure

Free Cash Flow Yield
= free cash flow / share price