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Ratios Made Simple

A beginner's guide to the key financial ratios

By Robert Leach

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About the Author

Robert Leach

Robert Leach FCCA FIPPM ACertCM is a certified accountant, private investor and author of over 30 books. His titles include How to Make Money on the Stock Exchange (Foulsham), Financial Times Guide to Your Company Pension, Allied Dunbar Guide to Financial Planning for the Over 50's and The Investor's Guide to Understanding Accounts. For two years he was a judge of the Stock Exchange Awards for ... Read more on Robert Leach

Contents Listing

About the Author
Introduction

1. Profitability Ratios
1.1. Earnings per Share (EPS)
1.2. Price-to-Earnings Ratio (P/E)
1.3. Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization Ratio (EV/EBITDA)
1.4. Price-to-Sales Ratio (PSR)

2. Investment Ratios
2.1. Dividend Yield
2.2. Total Return
2.3. Return On Capital Employed (ROCE)
2.4. Return On Equity (ROE)
2.5. Premium To Asset Value (PAV)
2.6. Internal Rate Of Return (IRR)
2.7. Return On Assets (ROA)
2.8. Dividend Payout Ratio

3. Dividend Cover
3.1. Dividend Cover

4. Margins
4.1. Gross Margin and Net Margin
4.2. Overheads To Turnover

5. Gearing
5.1. Gearing Ratio
5.2. Interest Cover

6. Solvency Ratios
6.1. Acid Test
6.2. Current Ratio
6.3. Cash Burn
6.4. Defensive Interval
6.5. Fixed Charges Cover

7. Efficiency Ratios
7.1. Stock Turn
7.2. Price-To-Book Value (PBV)
7.3. Overtrading and Undertrading
7.4. Item Comparison

8. Policy Ratios
8.1. Creditor Period
8.2. Debtor Period
8.3. Fixed Asset Spending Ratio

9. Volatility
9.1. Volatility Ratio
9.2. Standard Deviation

Appendix
About the Author
Introduction

1. Profitability Ratios
1.1. Earnings per Share (EPS)
1.2. Price-to-Earnings Ratio (P/E)
1.3. Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization Ratio (EV/EBITDA)
1.4. Price-to-Sales Ratio (PSR)

2. Investment Ratios
2.1. Dividend Yield
2.2. Total Return
2.3. Return On Capital Employed (ROCE)
2.4. Return On Equity (ROE)
2.5. Premium T ...

Jacket Text

Ratios provide an extremely effective method of understanding company accounts. At their most basic this usually involves taking one figure from the published accounts and dividing it by another - however, this seemingly simple process can reveal an enormous amount about both the nature and performance of a company.

'Ratios Made Simple' looks at ratios from the perspective of an investor, providing a toolkit for investors to use to accurately analyse a company from its accounts. This book is divided into nine chapters, with each chapter looking at a different aspect of potential concern to an investor:

1. Profitability Ratios
2. Investment Ratios
3. Dividend Cover
4. Margins
5. Gearing
6. Solvency Ratios
7. Efficiency Ratios
8. Policy Ratios
9. Volatility

For each ratio, financial expert Robert Leach provides a detailed definition, explains how it works, describes its use. Investors are also given a simple explanation of how to calculate each ratio, what the ratio means and how the investor should apply the answers in making investment decisions.

This book provides the investor with an essential guide to the use of these powerful analytical tools - tools that should form a vital part of an investor's decision-making process.

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Media Coverage

Share Crazy

A book review by James Faulkner of WatsHot.com

As an accountant, Robert Leach fcca, fippm, ACertCM has more letters after his name than he actually has in it. But don?t worry; Ratios Made Simple ...

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Sharecrazy.com

"A great piece of kit to have lying around on your desk for reference...undoubtedly a great piece of introductory material for novice investors."- Share Crazy21st August 2011

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