Annual Ratio Definitions
Book value (per share) - Common shareholders' equity divided by common shares outstanding at end of an indicated fiscal period. A much-used basis for evaluating a company's net worth and any changes in it from year to year.
Common shares outstanding - The number of common shares outstanding. Includes shares held by subsidiaries and other inter-company holdings. Net of treasury stock.
Current ratio - Ratio of current assets divided by current liabilities. An indicator of short-term debt-paying ability. The higher the ratio, the more liquid the company.
Debt/equity ratio (Total debt-to-equity ratio) - Short and long-term interest-bearing debt (including capital lease obligations) divided by shareholders' equity. A capitalization ratio that indicates the extent to which a company is financing its assets with debt and its degree of financial leverage. A high debt-to-equity ratio, which indicates very aggressive financing or a history of large losses, results in very volatile earnings. A low debt-to-equity ratio indicates conservative financing and low risk, with reduced possibilities of large losses or large gains in earnings.
Dividend coverage - Earnings before extraordinary items, divided by total dividends. Shows how many times over a company can pay its dividends from earnings.
Dividends per share (Dividends per common share) - Dividend paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term.
Earnings per share (EPS) - Earnings before extraordinary items, less preferred-share dividends, divided by average common shares outstanding during indicated fiscal year.
Interest coverage - Earnings before extraordinary items plus income taxes and interest expense. Shows how many times over a company can cover its interest obligations from earnings.
Interest coverage ratio - The ratio of interest coverage to annual interest expense. This ratio measures a firm's ability to pay interest.
Market price - The most recent price at which a security transaction took place.
Net profit margin - Net income divided by sales. The amount of each sales dollar left over after all expenses have been paid.
Operating margin - Operating revenues less operating expenses, divided by operating revenues, expressed as a percentage. Shows the percentage of operating revenues a company retains after operating expenses.
Price/earnings (P/E) ratio - A common stock analysis statistic in which the current price of a stock is divided by the current (or sometimes the projected) earnings per share of the issuing firm. As a rule, a relatively high price/earnings ratio is an indication that investors feel the firm's earnings are likely to grow. Price/earnings ratios vary significantly among companies, among industries and over time.
Percent change in assets - Percentage change in total assets during the indicated fiscal period.
Percent change in profit - Percentage change in earnings before extraordinary items during the indicated fiscal period.
Percent change in revenue - Percentage change in total revenue during the indicated fiscal period.
Quick ratio - A relatively severe test of a company's liquidity and its ability to meet short short-term obligations. The higher the ratio, the more liquid the company. The quick ratio is calculated by dividing current liabilities into all current assets with the exception of inventory.
Return on assets (ROA) - A measure of a company's profitability, equal to a fiscal year's earnings divided by its total assets, expressed as a percentage.
Return on capital (ROC, Return on average capital) - Earnings before extraordinary items, interest expense and income taxes, divided by average capital. Shows how effectively a company is employing its capital to generate profit.
Return on common Equity (ROE, Return on average common equity) - Earnings before extraordinary items, less preferred-share dividends, divided by average common shareholders' equity. Shows the rate of return on the investment for the company's common shareholders, the only providers of capital who do not have a fixed return.
Return on total equity (ROE) - A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year's after-tax income (after preferred stock dividends but before common stock dividends) divided by total equity, expressed as a percentage.
Sales per share - Main sources of revenue, net of excise taxes, trade discounts, returns and allowances, divided by common shares outstanding at end of indicated fiscal year.
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