Liquidity
Definiation: Measure of the firm’s ability to meet its short-term obligations.
Leverage
Definiation: Measure of the firm’s degree of indebtedness and its ability to meet longterm obligations.
Activity
Definiation: Measure of the firm’s efficiency in generation sales with its assets.
Profitabiity
Definiation: Measure of the returns on assets and equity.
Dupont System:
ROE = net profit margin x total asset turnover x equity multiplier
or
ROE = ROA x (1 + dept-to-equity ratio)