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Indicators
Profitability and Liquidity Measures
| Term | Definition |
|---|---|
| Asset Turnover | The measure of how efficiently the business has used assets to earn revenue |
| Cash Flow Cover | Shows the number of times cash flows from operating activities covers current liabilities |
| Creditors turnover | Indicates how quickly a business is paying its creditors |
| Debt Ratio | Shows the percentage of the business’ assets that are financed by liabilities |
| Debtors turnover | Indicates how quickly a business is collecting debts |
| Gross Profit margin | For each dollar of sales, indicates how much remains as gross profit |
| Net Profit Margin | For each dollar of sales, indicates how much remains as net profit |
| Quick Asset Ratio | Shows the ability of a business to pay its debts immediately |
| Return on assets | For every dollar invested in assets, indicates how much profit is generated |
| Return on owner’s investment | For every dollar invested, indicate how much the owner receives |
| Stock Turnover | Indicates how quickly a business is selling its stock |
| Working capital ratio | Shows the ability of a business to meet its debts in the next 12 months |