Refers to the ratio of current assets to current liabilities. It measures the liquidity of companies, i.e. their ability to meet current debt payments 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 the company on external funding, i.e. funding which is not from its shareholders or its overseas headquarters in the case of local branch of a foreign-incorporated company. The higher the company’s 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 company in its use of 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 company's profitability, i.e. the rate of return that the company has earned on the capital provided by the shareholders after accounting for payments to all other providers of capital.
Refers to the amount contributed by shareholders through the issue of ordinary or preference shares.
Refers to items controlled by the company as a result of past events and from which future economic benefits are expected to flow to the company. Examples include property, plant and equipment, investment in subsidiaries/associates and cash & cash equivalent.
Liabilities are present obligations of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. Examples include loans, trade payables and deposits (applicable for financial institutions only).
Refers to the shareholders’ interest in the company after deducting all its liabilities from its assets. 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.