Question: 3. EBITDA Coverage Ratio = (EBITDA + Lease Pay.)/(Interest+Principal pay. + Lease pay) Profitability Ratios: Measures effectiveness of a firm's operations Profit Margin = Net

3. EBITDA Coverage Ratio = (EBITDA + Lease Pay.)/(Interest+Principal pay. + Lease pay) Profitability Ratios: Measures effectiveness of a firm's operations Profit Margin = Net income available to common stockholders/Sales 2. Basic Earning Power = EBIT/Total Assets 3. Return on Total Assets (ROA) = Net income available to common stockholders/TA 4. Return on Common Equity (ROE) = Net income available to common stock/CE Market Value Ratios: Relate Stock price to its earnings - What do investors think about the company? 1. Price Earnings Ratio (P/E) = Price per share Earnings per share 2. Price/Cash Flow Ratio = Price per share/Cash flow per share 3. Book Value per share (BVPS) = Common Equity/Share outstanding 4. Market to Book Ratio (M/B) = Market price per share BVPS 5. Earnings per share (EPS) = Net Income'# common shares outstanding

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