Topics

1. Profitability Ratios

• Gross Profit Margin, Operating Profit Margin, and Return on Assets (ROA) help assess how efficiently the company generates profits from its assets and operations

• Key Insight: High capital investments in R&D or production facilities require strong profitability management to ensure long-term success

2. Liquidity Ratios

• Current Ratio and Quick Ratio help determine a company’s ability to cover short-term obligations

• Key Insight: Liquidity is critical in managing ongoing capital requirements, especially when government payments (defense) or raw material price fluctuations (chemicals) affect cash flow

3. Leverage Ratios

• Debt-to-Equity and Interest Coverage Ratios provide insight into the company’s reliance on debt and its capacity to service it

• Key Insight: Both industries frequently use leverage for large capital projects. Managing debt levels is crucial for financial stability

4. Efficiency Ratios

• Inventory Turnover and Asset Turnover measure how effectively the company is managing its resources

• Key Insight: Efficient asset utilization and inventory management are essential in industries with long production cycles and expensive assets

Tools