Financial Ratios

Debt to Equity Ratio (Definition, Formula, Example, and Analysis)

Definition: The debt to equity ratio is the debt ratio that is used to measure the entity’s financial leverages by using the relationship between total liabilities and total equity at the balance sheet date. Bankers, creditors, shareholders normally use the debt to equity ratio, and investors to provide the loan, extend credit terms, and an […]

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Fixed Charge Coverage Ratio: Definition | Using | Formula | Example | Explanation

Definition: Fixed Charge Coverage Ratio is one of the Financial Ratios used to measure an entity’s ability to pay interest expenses and fixed charge obligations from its profit before interest and tax. Fixed charge simply mean assets or similar kind that company use to secured loan that it borrow from the bank. The assets that

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Internal Rate of Return (IRR): Definition, Formula, Use, Problems, Example, and Analysis

What is the Internal Rate of Return? Internal Rate of Return is the rate or cost of capital that makes a project or investment’s Net Present Value exactly zero. The internal Rate of Return is quite important for management in decision-making for new investment proposals and performance appraisal. It is also used in performance appraisal

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Return on Capital Employed: Definition, Using, Formula, Example, Explanation

Overview Return on Capital Employed is one of the profitability ratios used to assess the profits before interest and tax that the company could generate from its business by using shareholders’ Capital employed. Capital employed is the fund that shareholders injected into the company plus other Capital and long-term debt. In other words, the fund

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What is Interest Coverage Ratio? (Definition, Using, Formula, Example, Explanation)

Definition: The interest Coverage Ratio is one of the Financial Ratios used to assess the profitability and abilities that interest expenses could be paid by profit before interest and tax. It assesses how profitable the entity could pay the interest liabilities or expenses. Most of the investors and shareholders will look very strictly to see

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How to Calculate Inventory Turnover Ratio? (Definition, Using, Formula, and Example)

Inventory Turnover Ratio: The Inventory Turnover Ratio is one of the Financial Ratios used to assess how often the inventories are replaced and sales performance over a specific period. This ratio is normally used to assess how well the inbound and outbound system of inventories are, based on the strong relationship between the Cost of

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