101 Ways to Score Higher on Your Series 7 Exam: What You Need to Know Explained Simply by Claire Bradley

Author:Claire Bradley
Language: eng
Format: epub
Publisher: Atlantic Publishing Group, Inc.
Published: 2016-11-06T23:59:30+00:00

Measuring a company’s profitability is another way to determine its health. Comparing different companies’ profitability will give you a quick picture of their ability to generate profit.

These are profitability ratio formulas you should be familiar with:

Operating profit margin = operating income/net sales

Net profit ratio = net income/net sales

To determine if a company is in good shape to repay debts, you must also determine if the company is not holding too much debt, or “spread too thin,” by assessing its asset coverage.

These are asset coverage ratio formulas you should be familiar with:

Net asset value per bond = net worth/bonds shares outstanding

Bond interest coverage = EBT/bond shares outstanding

Book value per share = (assets - liabilities)/bond shares outstanding

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