TABLE 3.8 Common Financial Ratios Long-term solvency, or financial leverage, ratios Total assets Total equity Total debt ratio = o assets Debtequity ratio = Total debVTotal equity Equity = Total assets.rrotal equity Long-term debt Long-term debt ratio = ong-term cbt + o Times interest earned ratio = EBIT terest EBIT Depreciation Ill. solvency, or liquidity, ratios Current assets Current ratio = Curent liabilities Current assets Invento Quick ratio = urrent a tes Cash Cash ratio = nt I Net working capital Net working capital to total assets = otal assets Current assets Interval = verage dal y operating costs Asset or turnover, ratios Cost of goods sold Inventory turrw.er = nventocy 365 days nventory turnover Receivables turnover = Accounts receivable 365 days Days' sales in receivables = e vab es turnover Sales NWC turnover = Fixed asset turnover = Net fixed assets Sa les Total asset turnover = o assets Cash coverage ratio = ProfitiUty ratios _ Net inco Return on assets (ROA) Return on equity (ROE) = Interest Net inco Total assets Net income Total equity V. Net income Sales Assets Market value ratios Price per share ratio = arnngs per s are Priceearnings ratio PEG ratio = n.ngs growth rate ( Pnce per share Pricesales ratio = aes pers are Market value per share Market-tobook-ratio = v per share Market value of assets Tobins O ratio = lacement cost o assets Enterprise value Enterprise value-EBITDA ratio = EBITDA