Refers to the ratio of current assets to current liabilities. It measures the liquidity of companies, i.e. their ability to meet current liabilities when due. A ratio of 1 indicates that the company has exactly balanced its current liabilities with current assets. A ratio above 1 indicates liquidity in the company. The lower the ratio is below 1, the higher the risk of the company running into a liquidity problem.
Refers to the ratio of total equity to total assets. It measures the dependence of companies on external funding, (i.e. debt) to finance their assets. The higher the dependence on external funding, the lower the ratio.
Profit before Tax
Profit before tax is defined as total (operating and non-operating) income less total expenses.
Return on Assets (ROA)
Refers to the ratio of profit before interest and tax to average total assets. It measures the efficiency of the companies in using their assets to generate earnings. Interest payments are not deducted from earnings as they are the cost of financing business capital rather than an operating cost. The resulting ratio measures the earning capacity of the company's assets regardless of how the assets are financed.
Return on Equity (ROE)
Refers to the ratio of profit before tax to average total equity. It measures the companies’ efficiency in using their shareholders’ equity to generate earnings.
Refers to the amount contributed by shareholders through the issue of ordinary or preference shares.
Refers to items controlled by the companies from which future economic benefits are expected to flow to the companies. Examples include property, plant and equipment, investment in subsidiaries/associates and cash & cash equivalent.
Total equity comprises mainly share capital, retained earnings and other reserves. For Singapore branches of foreign-incorporated companies, the net amount owed by Singapore branches to the foreign head offices are used as proxies for their equity.
Liabilities are financial obligations of the companies that are payable to another entity. Examples include loans, trade payables and deposits (applicable for financial institutions only).