Investigating Financial Statements
• Calculate Key Indicators (Ratios) o Safety & Coverage • EBITDA = EBITDA / Revenue •
Measures the amount earnings or cash flow to total revenue • Often used by lenders rather than Net Profit
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Investigating Financial Statements
• Calculate Key Indicators (Ratios) o Balance Sheet Management
• Balance sheet management ratios measure how effectively the company is at managing assets • Revenue to Assets = Revenue / Total Assets • Used as a measure of overall productivity this ratio indicates inadequate revenue volume or excessive asset levels • Return on Assets = Profit / Total Assets • Measures the efficiency of company assets in generating a return
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