Master key financial ratios required for the CFA exam, including formulas and interpretations for liquidity, leverage, and profitability analysis.
What is the current ratio formula?
Current Ratio = Current Assets / Current Liabilities
What does the quick ratio measure?
The quick ratio measures a company's ability to meet short-term obligations with its most liquid assets.
What is the formula for Return on Equity (ROE)?
ROE = Net Income / Shareholder's Equity
What does the interest coverage ratio indicate?
It indicates how easily a company can pay interest on its outstanding debt.
How is the debt-to-equity ratio calculated?
Debt-to-Equity Ratio = Total Debt / Total Equity