Week 4 Survey of Common Ratios

Week 4: Lecture

Survey of Common Ratios

For the purposes of this course we will discuss the following ratios:

  • Liquidity Ratios
    These types of ratios indicate relatively how easily a firm can raise cash
  • Asset Management Ratios  (aka Asset Utilization Ratios)
    These these types of ratios indicate how productive the firm's assets are if they are producing what they should
  • Debt Management Ratios
    These types of ratios measure the riskiness of the firm's income
  • Profitability Ratios
    These types of ratios indicate if the firm is making any money, and how much in relation to what's invested. They also give you an indication of how the firm is doing in controlling its costs
  • Market Value Ratios 
    Market Value Ratios incorporate current stock prices into the company’s ratio analysis. They allow you to assess how much positively investors in the public market view the company’s performance.

These will be discussed in detail on the following pages.  We will not present an exhaustive list of ratios, but concentrate on the ones most widely used. 

The numbers for each ratio are drawn from Amalgamated Hat Rack’s financial statements on the Ratio lecture topic page.