What is EBIT?

Answer:

EBIT stands for Earnings before Interest and Taxes. A measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes.

What is EBITDA?

Answer:

Ø  EBITDA stands for Earnings before Interest, Taxes, Depreciation and Amortization.

Ø  An approximate measure of a company's operating cash flow based on data from the company's income statement. Sometimes also called operational cash flow.

What is Quick Ratio?

Answer:

Ø  A measure of a company's liquidity and ability to meet its obligations. Quick ratio, often referred to as acid-test ratio,

                                               

Acid-Test (Quick) Ratio = Total Current Assets – Stock/Total Current Liabilities

                                 

 In general, a quick ratio of 1 or more is accepted by most creditors.

What is Current Ratio?

Answer:

Ø  An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. It is calculated as:

      

Current Ratio =Total Current Assets/ Total Current Liabilities      

                        

Ø  In general, a Current ratio of   2 : 1  is accepted by most creditors.

What are the different types of Ratios?

Answer:

·        Profitability ratios (Gross Profit Margin, Net profit margin, Operating profit margin,       ROA, ROE)

·        Liquidity ratio (Current ratio, Quick ratio)

·        Asset Utilization Ratios (Inventory Turnover, Account Receivable Turnover)

·        Debt Utilization Ratios (Debt to equity, Debt to total assets)

·        Coverage Ratios (Debt Service Coverage ratio, Interest service Coverage Ratio)