Annual report is a very important communication of the Management with the shareholders. It not only gives the information on the past performance, but also gives information on the future direction of the company.
Analyzing the Financial statements from the annual report is an important element towards successful investing.
The following top 12 Financial Ratios give the overall performance of a company.
Of course, there are numerous ratios which have to be looked when doing a deeper analysis on a particular aspect of a company. However the following 12 ratios are good enough when scanning or to get an overview of the companies performance.
Measures of Performance : Profitability (Gross Margin) %, Net Margin %, Capital Turnover, Stock Turnover & Working Capital Turnover
Measures of Investments : Return on Equity, Earnings Per Share, Dividend cover, Dividend %, Book Value
Measures of Financial Status: Debt Equity Ratio, Current Ratio, Fixed Asset times Shareholders Funds