Here is a thread of TEN ratios to know when looking at financial statements!

Knowing these will make you a more intelligent investor! #FinancialFreedom #financeTips

Return on Assets (ROA)

Gives us a good description of how a companies net income compares to its total assets.

Equation: Net income / Total Assets

Gross Margin Ratio

A profitability ratio that shows how a company is efficiently utilizing its assets to produce more profit.

(Total Revenue - COGS) / Total Revenue

Acid-Test or Quick Ratio

Measures the ability of how fast a company uses its cash to pay off debts.

(Current Assets - Inventory) / Current Liabilities