Financial Statement Analysis

Efficiency 

1. Receivables Turnover & Average Collection Period
2. Total Assets Turnover 
3. Inventory Turnover & Average Days in Inventory

Profitability (“How good is the company at making profit?”)

1. Gross Profit Margin
2. Net Profit Margin
3. Return on Total Assets (ROA)
4. Return on Capital Employed (ROCE)
5. Return on Ordinary Shareholders’ Equity (ROE)

Investment

1. Earnings per Share (EPS)
2. Price–Earnings Ratio (P/E)
3. Dividend Yield & Dividend Payout

Gearing or Leverage or Financial Stability (Solvency) Ratio

(“Can the company survive in the long term and handle its debt?”)

1. Equity ratio
2. Time Interest Ratio
3. Debt Ratio

Liquidity (“Can the company pay its short-term debts on time?”)

1. Current Ratio
2. Quick Ratio (Acid Test)

Discussions

The limitations of using ratio analysis to evaluate a firm’s performance and financial health

Creative accounting
How it can impact ratio analysis