Ratio What the ratios tells us Formula Expression
What proportion of sales did each item on the SOE
Vertical Statement of Earnings Item
Analysis account for? What percentage of sales was spent? What Sales %
percentage was kept?
Return on Measure of earnings relative to investment made with
Equity shareholder, owner and/or company funds. Increased Earnings
(Return on earnings are the desired proceeds from invested funds. Total Equity
Net Worth to Proportion of assets financed by shareholder, owner Total Equity
Total Assets and/or company funds (equity). Total Assets
Measures the proportion of debt and equity used to Total Debt (liabilities)
Debt to Equity finance assets. Compared to each dollar of equity, how Total Equity %
many dollars of debt has the company taken on?
Determines how many times the interest expense could
Interest be paid given the company’s earnings. Compares profit EBIT X
Coverage Interest Expense
levels to the amount of interest owed.