Financial Ratios Explained Business

financial ratios examples

With a parity of 64.7% (125th), it has slipped 0.25 percentage points compared to the previous editions and now stands nine positions lower in the rankings. Japan’s parity in Political Empowerment at 5.7% is one of the lowest in the world (ranking 138th). Ten percent of its parliamentary positions and 8.3% of ministerial positions are held by women, while there has not been any female head of state. There is almost full parity on both the Educational Attainment and Health and Survival subindexes.

A working capital ratio of 2 or higher can indicate healthy liquidity and the ability to pay short-term liabilities, but it could also point to a company that has too much in short-term assets such as cash. Some of these assets might be better used to invest in the company or to pay shareholder dividends. Liquidity ratios can give you an idea of how easily a company can pay its debts and other liabilities.

Dividends Per Share (DPS) Ratio

Seven countries – including the Democratic Republic of the Congo, Tanzania and Rwanda – have seen greater than 1 percentage-point rise in the share of senior officer positions held by women. Sub-Saharan Africa’s parity score is the sixth-highest among the eight regions at 68.2%, ranking above Southern Asia and the Middle East and North Africa. Namibia, Rwanda and South Africa, along with 13 other countries, have closed more than 70% of the overall gender gap. The Democratic Republic of the Congo, Mali and Chad are the lowest-performing countries, with scores below 62%. And while there has been progress of 0.5 percentage points or more in 17 out of 36 countries, scores for 17 countries have seen decline of 0.5 percentage points or more since the last edition. Based on the constant sample, this marks a marginal improvement of 0.1 percentage points.

Progress towards parity has been stagnating for over a decade and the region registers a 0.2 percentage-point decline since the last edition. While 11 out of 19 countries improve, one stays the same and eight (including China, the world’s second-most populous country) recede on the overall index. New Zealand, the Philippines and Australia have the highest parity at the regional level, with Australia and New Zealand also being the two most-improved economies in the region. On the other hand, Fiji, Myanmar and Japan are at the bottom of the list, with Fiji, Myanmar and Timor-Leste registering the highest declines. At the current rate of progress, it will take 189 years for the region to reach gender parity. Educational Attainment is the subindex with the second-highest global parity score, with only 4.8% of the gender gap left to close.

Debt Service Coverage Ratio (DSCR)

Asset-coverage ratio measures risk by determining how much of a company’s assets would need to be sold to cover its debts. Coverage ratios are financial ratios that measure how well a company manages its obligations to suppliers, creditors, and anyone else to whom it owes money. Lenders may use coverage ratios to determine a business’s ability to pay back the money it borrows. Say a company has $500,000 in net sales and $50,000 in average total assets. Their asset turnover ratio is 10, meaning every dollar in assets generates $10 in sales. Solvency ratios are financial ratios used to measure a company’s ability to pay its debts over the long term.

  • They can also be used to compare different companies in different industries.
  • Nineteen countries, including the populous Nigeria, Ethiopia and the Democratic Republic of the Congo, have improved on this subindex by 0.5 percentage points or more.
  • Together with receivables turnover, average collection helps the firm develop its credit and collections policy.
  • This lets you see how good a company is at using its assets to generate income.
  • However, in five countries healthy life expectancy for women is lower than that of men.

The comparisons may direct attention to areas within a company that need improvement or where competitors are more successful. Companies that are primarily involved in providing services with labour do not generally report «Sales» based on hours. These companies tend to report «revenue» based on the monetary value of income that the services provide. Financial ratios are typically divided into the classifications noted below. A higher P/E can indicate that a stock is expensive, but that could be because the company is doing well and could continue to do so. Natalya Yashina is a CPA, DASM with over 12 years of experience in accounting including public accounting, financial reporting, and accounting policies.

Analyzing the Profitability Ratios

There has been an improvement of 0.5 percentage points or more in parity in 23 out of 36 countries, with gains in parity in literacy rate in 23 out of 36 countries. However, the number of countries with 90% or more parity decreases with enrolment in successive levels of education. Apart from Mali, Guinea and Chad, How to Start Your Own Bookkeeping Startup all countries have more than 90% parity in enrolment in primary education, and 16 have reached full parity. Ten countries have less than 90% parity in secondary education and 21 countries less than 90% parity in tertiary education. Ranked 43rd, the United States has closed 74.8% of its overall gender gap.

Return on assets or ROA measures net income produced by a company’s total assets. This lets you see how good a company is at using its assets to generate income. Operating-margin ratio measures how much total revenue is composed of operating income, or how much revenue a company has after its operating costs.

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