Debt to Asset Ratio – how did you finance your assets?
Introduction Leverage ratios are a set of financial relationships which indicate a business’s debt level against its assets and operations. Analysts have numerous leverage ratios to understand the degree of
Return On Equity – how much are the shareholders making?
Introduction Investors and analysts are interested in understanding the financial health and profitability of a company. They use a financial metric called Return On Equity (ROE) to measure how effectively
SG&A – how high are the Selling General & Administrative Expenses?
Introduction A business is involved in numerous activities, like production and business operations. In the previous articles, we have understood COGS as the funds used to sustain the production of
Effective Tax Rate – how much does the Government take away?
Introduction In taxation, we hear numerous terms like statutory tax rate, effective tax rate, tax liability, marginal tax, etc but we fail to understand the intricacies of these terms. Effective
Operating Expenses (Opex) – how high are they?
Introduction Operating expenses form the backbone of every business, encompassing essential costs incurred to sustain daily operations. Understanding operating expenses is paramount for investors and analysts, offering valuable insights into
Days Payable Outstanding (DPO) – how long do you have before you pay them
Introduction In the dynamic landscape of financial management, Days Payable Outstanding (DPO) emerges as a crucial indicator of a company’s financial stability and operational efficiency. DPO measures the average number
Days sales outstanding (DSO) – How quickly are you recovering your dues?
Introduction In the day-to-day operations of a business, transactions occur frequently, ranging from cash exchanges to credit agreements. While cash transactions ensure immediate liquidity, credit transactions can tie up funds,
Cost of Goods Sold – whats your gross margin like?
Introduction In business finance and accounting, expenses form the most significant aspect of manufacturing, acquisition, and product pricing. These expenses are categorised as direct and indirect expenses. As the keystone
Inventory Turnover Ratio – Can you do more with less?
Introduction Inventory in a business is not limited to stocks and goods, it symbolizes the flow of resources, supply and demand and a firm foundation of customer satisfaction. Inventory turnover
Debt Service Coverage Ratio – Are you eating more than you can chew?
Money is the lifeblood of any firm. Funds are crucial because they are necessary to finance assets such as equipment, inventories, and technology, to meet working capital requirements, and to