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*''Profitability ratios'' are ratios that demonstrate how profitable a company is. A few popular profitability ratios are the breakeven point and gross profit ratio. The breakeven point calculates how much cash a company must generate to break even with their start up costs. The gross profit ratio is equal to gross profit/revenue. This ratio shows a quick snapshot of expected revenue.
*''Activity ratios'' are meant to show how well management is managing the company's resources. Two common activity ratios are accounts payable turnover and accounts receivable turnover. These ratios demonstrate how long it takes for a company to pay off its accounts payable and how long it takes for a company to receive payments, respectively.
*''Leverage ratios'' depict how much a company relies upon its debt to fund operations. A very common leverage ratio used for financial statement analysis is the debt-to-equity ratio. This ratio shows the extent to which management is willing to use debt in order to fund operations. This ratio is calculated as: (Long-term debt + Short-term debt + Leases)/ Equity.<ref>
[[DuPont analysis]] uses several financial ratios that multiplied together equal return on equity, a measure of how much income the firm earns divided by the amount of funds invested (equity).
A [[Dividend discount model]] (DDM) may also be used to value a company's [[stock]] price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.<ref>
Financial statement analyses are typically performed in spreadsheet software and summarized in a variety of formats.
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