Financial ratio for Bank of America

February 20, 2023February 20, 2023 Discipline: Accounting
Learning Goal: I’m working on a accounting multi-part question and need an explanation and answer to help me learn.

Bank of America

Profitability ratio

Gross profit margin% = (Sales – Cost of goods sold) / Sales

Net profit margin % = Net Income / Sales

Liquidity ratio

Current ratio= Current asssets/ Current liabilities

Inventory turnover: Cost of goods sold ÷ inventory balance

Leverage ratio

Debt to Equity Ratio: (Total Debt ÷ Total Equity)

Debt to Total Capitalization: (Debt ÷ (Debt + Equity

Asset efficiency

Total asset turnover = Sales / Total assets

Fixed asset turnover = Sales / Fixed assets

Operating returns

Return on Equity: Net Income ÷ Equity

Return on Assets: Net Income ÷ Total Assets

Market ratio

Price-to-Earnings (P/E) ratio: (Price of one share ÷ Earnings of one share

Dividend Yield ratio: (Dividends per share ÷ Stock price per share

The DuPont system

ROE = Net Income X Sales X Assets

Sales Assets Equity

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