Financial Ratios: Ratio Formula 2019 2018 2017 2016 Profitability Ratios measure a company's ability to generate income relative to revenue, balance sheet assets, operating costs, and equity. Gross margin ratio Gross margin ratio - Gross 34.29 32.3% 24.7% 25.0% profit/Net sales Return on assets ratio Return on assets ratio = Net income / Total assets 3.0% 4.1% 4.8% 0.2% Return on equity ratio Return on assets ratio Net income / Equity 6.4% 8.3% 9.5% 0.4% Liquidity Ratios Liquidity ratios measure a company's ability to repay both short and long-term obligations Current ratio Acid-test ratio Cash ratio Solvency Ratio Current ratio - Current assets/Current liabilities 10.94 0.84 1.00 1.36 Acid-test ratio - Current assets - Inventories Current liabilities 10.58 0.54 0.64 10.96 Cash ratio=Cash and Cash equivalents/Current Liabilities 10.19 0.22 0.28 10.37 These ratios measure the enterprise's ability to meet its debt obligations. Such ratios are used by lenders to the business, as it gives them comfort on the recoverability of their dues. Debt to equity ratio - Total liabilities / Shareholder's 0.36 0.39 10.34 10.39 equity Interest coverage ratio = Operating income / Interest expenses 28.4 1.19 These ratios provide the information about the growth that the company has been able to achieve in business. Debt to equity ratio Interest coverage ratio Growth ratios Sales growth rate -0.519 20.25% 19.56% -8.22% EPS growth rate -8.379-24.25%857.14% 120.29% Efficiency Ratios Measure how well a company is utilizing its assets and resources. Inventory turnover ratio Inventory tumover ratio- Cost of goods sold Average inventory 10.43 0.43 0.36 Accounts receivable Inventory turnover ratio tumover ratio Cost of goods sold Average Receivables 3.63 4.27 3.32 3.12 Ratios review: 10.30 Profitability ratios