Financial ratios for small, medium and large size groups can be calculated using the above information as well as the formula for each specific ratio as presented in the QFS publication. For example,the following formula is applied to the small, medium and large estimates to calculate the profit margin ratio:
The results of the QFS survey (which covers a sample of 5000 private and selected public enterprises operating in the formal business sector of the South African economy, excluding agriculture, financial intermediation, insurance and government institutions) are published three months after the reference quarter. The QFS publication also allows for various other types of analysis, using the different variables contained therein. Readers are encouraged to delve into the various relationships using the QFS data, either at the aggregated or small, medium and large diasggregated level (the data being accessible from the Stats SA website). Estimates for small, medium and large categories for each industry are available in Excel and are published at the same time as the QFS statistical release.
Ratio Analysis/Applying Ratios to a Business - …
Users can also examine the profit ratios for an industry and size group of their choice. For example, in the real estate and other business services industry, the profit ratio for the industry was unchanged at 0,18 between the March 2013 and June 2013 quarter, indicated in Figure 1. However, the calculated ratios for the small, medium and large size companies in the same sector indicated that the profit ratio for large enterprises remained unchanged, at 0,14, whereas for the medium and small size groups the profit margin ratios have changed. The medium size enterprises showed a decrease in this ratio, from 0,18 to 0,11, while small size enterprises showed an increase, from 0,22 to 0,23 (see Figures 2 and 3).
Tools for Decision Analysis: Analysis of Risky Decisions
are essentially metrics that a business can use to measure it performance and that lenders use to assess risk and monitor performance of their commercial loans. There are several categories of financial ratios that are used by lenders and also valuable for businesses to monitor. The major categories measure liquidity, profitability, and debt ratios.
The liquidity ratios provide an indication of whether the business is able to pay its short term obligations from its current assets. These ratios include the , which measures (cash, receivables, inventory, and marketable securities) in relation to (accounts payable, taxes, and the current portion of term debt). A more accurate measure is the , which only uses the (basically the current assets, but excludes inventory and other assets that are not available to quickly turn into cash to meet obligations).
Ratio Analysis: Using Financial Ratios - Investopedia
Generally, ratios are used in two ways: for
internal analysis of items in a balance sheet; and/or
for comparative analysis of a company's ratios at
different time periods and in comparison to other firms
in the same industry.
Below find fourteen key business ratios.
There is a lot to be said for valuing a company, it is no easy task
The debt ratios help determine risk to a lender and to the business based upon the capitalization of the business and its cash flow in relation to its debt payments. The (the total liabilities divided by the assets) can provide an indication of the financial stability of the company. Although this can be misleading at times if the assets include a significant amount of intangible assets such as goodwill. The (operating cash flow divided by debt payments) measures the ability of the business to meet its debt payments.