*The most commonly used ratios in finance.*How to interpret the text:

Data types presented in

**RED**are downloadable data

If ratios or their components are not ready for download I try to present ways to calculate them (indirectly)

*1. Debt to equity ratio*

*2. Current ratio*

*3. Quick ratio*

*4. Return on equity (ROE)*

*5. Net profit margin*

*1.*

*Debt-to-Equity Ratio***Total Liabilities / Shareholders Equity**

Shareholder equity = book value x number of shares

**Compustat**

Direct download: DLC

DLC represents the total amount of short-term notes and the current portion of long-term debt (debt due in one year).

LT = Total liabilites

BKVLPS (book value per share)

(CSHO) Common Shares Outstanding

**Formula:**

LT / (BKVLPS x CSHO) = debt to equity

**Amadeus**

Book value per equity = Book value per share x number of shares outstanding

Instead of Book value of equity, Market Value ( MV) can be used (market capitalisation)

(closing price x shares outstanding)

In Amadeus only closing price frequencies monthly and weekly, not daily

And: market value per year can be downloaded

Total liabilities = current liabilities + long term liabilities

**Formula**:

Total debt / total (shareholder) equity = Total liabilities / (market capitalisation x number of shares outstanding) OR (market capitalisation x book value per share)

**Datastream***

WC03351 Total liabilities:

WC03995 Shareholder equity: (book value per equity)

NOSH Number of shares outstanding

Instead of Book value of equity, Market Value ( MV) is used (market capitalization)

Market Value MV = share price (P) x number of shares (NOSH) (market capitalisation)

**Formula**:

1. WC03351 / WC03995

2. WC03351 / MV

*) using search terms debt equity ratio in datatypes provides to following data producing datatypes:

WC08231 (total debt % common equity); WC08221 (total debt % total capital/std); WC08231A (total debt % common equity); WC08231R (total debt % common equity) !! Not all companies provide data. Error types like No data values found; no world scope data; access denied

For more downloadables on income statement and balance sheet see this

*2.*

*Current Ratio (working capital ratio)***Current Assets / Current Liabilities**

**Compustat**

**Current assets total / current liabilities = current ratio**

ACT = Current assets total

LCT = Current Liabilities - Total

**Formula**

*:*Current ratio

*=*ACT / LCT

**Amadeus**

**Formula**

*:*Current ratio Current assets total / current liabilities

**Datastream**

**Formula:**

WC08106 Current ratio = (current assets total [WC02201] / current liabilities [WC03101] )

Only industrials apply

*3.***quick assets ratio)**

*Quick Ratio (***(Current Assets – Inventories) / Current Liabilities**

**Compustat**

**INVT -- Inventories - Total**

ACT = Current assets total

LCT = Current Liabilities - Total

**Formula:**

(ACT - INV) / LCT

**Amadeus**

Inventories not in AMADEUS

**Datastream**

**Quick ratio WC08101**

Inventories total WC02101

Current assets WC02201

Current liabilities WC03101

**Formula**:

(WC02201 - WC02101) / WC03101 = WC08101

Not all companies provide data

*4.***return on net worth)**

*Return on Equity (ROE) (***Net Income / Shareholder's Equity or**

**(net earnings (after taxes) - preferred dividends) / common equity**

**Compustat**

**NI Net income**

(BKVLPS x CSHO) shareholder equity

BKVLPS (book value per share)

CSHO Common Shares Outstanding

**Formula**:

NI / (BKVLPS x CSHO)

**Amadeus**

**P/ L for period = Net Income**

Book value per share x number of shares outstanding = Book value per equity

ROE using net Income %

**Formula**

*:*

(P/L)

*/ (*Book value per share x number of shares outstanding) = ROE

**Datastream**

ROE (total): WC08301

WC03995 Shareholder equity: (book value per equity)

NOSH Number of shares outstanding

Instead of Book value of equity, Market Value ( MV) is used (market capitalization)

Market Value MV = share price (P) x number of shares (NOSH) (market capitalisation)

Formula: WC01001 / MV = WC08301 OR WC01001 / WC03995 = WC08301

*5.*

*Net Profit Margin***Net Profit / Net Sales**

**Compustat**

**Gross profit margin**

Gross Income / Net Sales or Revenues * 100 = UGI / SALE x 100

Gross profit: GP (loss)

Gross income: UGI

. the difference between sales or revenues and cost of goods sold and depreciation.

Net sales or revenues: SALE (sales/turnover)

gross sales and other operating revenue less discounts, returns and allowances.

REVT = Revenue - total

GP = UGI / SALE x 100

**Amadeus**

**Gross profit**

Profit margin (%)

Sales

**Formula:**

Gross profit / sales (not exactly)

**Datastream**

**DWNM = net profit margin**

WC01001

**Net sales or revenues**

WC01540

**Net profit( operating income)**

* Components can't be all downloaded. Not all companies provide data

**LINKS**

**Compustat:**For more downloadables on income statement and balance sheet see this

**Amadeus:**For more downloadables on income statement and balance sheet see this

**Datastream:**for more downloadables on income statement and bsalance sheet, see this

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