10. Other Analysis Ratios and Tools

Previous chapters covered several financial analysis ratios and tools. Among them were working capital, average collection period, inventory turnover, return on equity, return on invested capital, return on assets used, cash-on-cash return, payback, and discounted cash flow method. This next-to-last chapter briefly considers some other ratios or tools used in financial analysis:

• Profit as a percentage of sales

• Breakeven point

• Current ratio

• Acid test or quick ratio

• Debt-equity ratio

• Earnings per share

• Price-earnings ratio

Profit as a Percentage of Sales

Different industries and companies have different historical relationships between profits and sales. Good manufacturing businesses have profits ...

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