Using ratios to analyse companies

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18. Other ratios

• Price cash flow ratio: share price divided by cash flow per share
• Net asset value (or book value) per share: ordinary shareholders' funds (excluding intangible assets) divided by the number of shares in issue
• Price to sales ratio: share price divided by sales per share, or market capitalisation divided by total sales
• Price to R&D ratio: market capitalisation divided by R&D expenditure
• Price to book value: share price divided by asset value or market capitalisation divided by the total net assets
• Debt/Equity: net borrowings as a percentage of shareholders' funds

1. Why bother with ratios? 2. A word of warning 3. The P&L and the balance sheet 4. Grouping the ratios 5. Profit margin 6. Return on capital employed (ROCE) 7. Sales as a multiple of capital employed 8. Stockturn 9. Debt collection 10. Payment of trade creditors 11. Cash-to-cash cycle 12. Gearing 13. Interest cover 14. Current ratio 15. Quick ratio (acid test) 16. Earnings ratios 17. Dividend ratios 18. Other ratios 19. Sources of information 20. Conclusion

• Magic Numbers