Corporate Finance

ntroduction to the company:

WULIANGYE GROUP

Explanation on the financial ratios

 Current ratio reveals the ability of a company to cover its liability in short run.

 Quick ratio measures a company's capacity, after excluding the least reliable current asset-inventory, to pay off its short-run liability. It is more precise than current ratio.

 Cash ratio measures how much cash a company has to pay off its current liability.

 Total debt ratio reveals the weight a company's liability makes up in its total assets.

 Debt-equity ratio measures how much money a company can borrow based on the equity it has collected.

 Equity multiplier measures how much asset a company can accumulate base on the equity it has collected.

 TIE ratio measures the ability a company has to cover its interest.

 Cash coverage ratio measures the ability a company have to cover its interest on account of depreciation, which is not a cash out flow,

 Inventory turnover measures how many times of its inventory a company has sold during a year.

 Day's sales in inventory measures how many days a company spends in selling one warehouse amount of inventory.

 Receivables measures the times total sales have on the sales collected in the form of bills in one year.

 Day's sales in receivables measures how many days a company spends in collecting cash from its selling-debtors.

 Total assets turnover measures how much money a company can obtain using its total assets.

 Profit margin measures how much a company obtains in its sales excluding the expense spent.

 ROA measures how much profit its total assets generates for the company.

 ROE measures how much profit its fundamental capital (equity) generates.

 PE ratio means, if you bought the stock of the company now, how many years you will wait to get your cost back in terms of current price per share and current earning per share.

 Market-to-book ratio means how many times a company extends based on its original capital( equity).