Examples of capital intensity ratio in the following topics:

 Calculate the Weighted Average Cost of Capital
Define the Weighted Average Cost of Capital
The WACC is the cost of capital taking into account the weights of each component of a company's capital structure.
 To calculate WACC, multiply the cost of debt by the ratio of debt to total market value of the company.
 Then add this to the cost of equity multiplied by the ratio of equity to total market value.
 Stated differently, the return on capital of a new project must be greater than the weighted average cost of capital.
 This is then added to the cost of equity, r_{E} , multiplied by the ratio of equity to total market value.
 capital intensity ratio (noun) the amount of fixed or real capital present in relation to other factors of production, especially labor

 Capital intensity is the term for the amount of fixed or real capital present in relation to other factors of production.
 Rising capital intensity pushes up the productivity of labor.
 Return on assets gives us an indication of the capital intensity of the company.
 Capital intensity can be stated quantitatively as the ratio of the total money value of capital equipment to the total potential output.
 In other words, changes in the retention or dividend payout ratios can lead to changes in measured capital intensity.

 The ROA is the product of two common ratios: profit margin and asset turnover.
 The return on assets ratio (ROA) is found by dividing net income by total assets.
 This ratio measures how much each dollar in asset generates in sales.
 A higher ratio means that each dollar in assets produces more for the company.
 Companies that operate in capital intensive industries will tend to have lower ROAs than those who do not.

 Leasing shifts risks to the lessor, but if the property market has shown steady growth over time, a business that depends on leased property is sacrificing capital gains.
 Depreciation of capital assets has different tax and financial reporting treatment from ordinary business expenses.
 For businesses, leasing property may have significant financial benefits, which are outlined below:
Leasing is less capitalintensive than purchasing, so if a business has constraints on its capital, it can grow more rapidly by leasing property than by purchasing property.
 Capital assets may fluctuate in value.
 Depreciation of capital assets has different tax and financial reporting treatment from ordinary business expenses.
 capitalintensive (adjective) Capital intensity is the term for the amount of fixed or real capital present in relation to other factors of production, especially labor.

 Calculate the different types of price to book ratios for a company
The pricetobook ratio is a financial ratio used to compare a company's current market price to its book value.
 The pricetobook ratio, or P/B ratio, is a financial ratio used to compare a company's current market price to its book value.
 In the first way, the company's market capitalization can be divided by the company's total book value from its balance sheet.
 Industries that require more infrastructure capital (for each dollar of profit) will usually trade at P/B ratios much lower than, for example, consulting firms.
 It is also known as the markettobook ratio and the pricetoequity ratio (which should not be confused with the pricetoearnings ratio), and its inverse is called the booktomarket ratio.

 Financial ratios are categorized according to the financial aspect of the business which the ratio measures.
 Financial ratios are categorized according to the financial aspect of the business which the ratio measures .
 Ratio analysis includes profitability ratios, activity (efficiency) ratios, debt ratios, liquidity ratios and market (value) ratios
Liquidity ratios measure the availability of cash to pay debt.
 Current ratio (Working Capital Ratio): Current assets / Current liabilities
Acidtest ratio (Quick ratio): (Current assets  Inventory  Prepayments) / Current liabilities
Activity ratios measure how quickly a firm converts noncash assets to cash assets.
 Thus, the ratios of firms in different industries, which face different risks, capital requirements, and competition are usually hard to compare.

 Use a company's debt ratio to evaluate its financial strength
The debt ratio is expressed as Total debt / Total assets.
 Debt ratio = Total debt / Total assets.
 Financial ratios are categorized according to the financial aspect of the business which the ratio measures.
 Thus, the ratios of firms in different industries, which face different risks, capital requirements, and competition, are usually hard to compare.
 Debt ratio = Total debt / Total assets
Or alternatively:
Debt ratio = Total liability / Total assets
The higher the ratio, the greater risk will be associated with the firm's operation.
 debt to total assets ratio (noun) after tax income divided by liabilities

 A high dividend ratio appeals to investors who want high current income and are unconcerned with capital gains.
 A lower ratio appeals to investors who value growth and capital gains over income.
 The Target Payout Ratio, or Dividend Payout Ratio, is the fraction of net income a firm pays to its stockholders in dividends.
 Investors seeking high current income and limited capital growth prefer companies with high Dividend Payout Ratios.
 However investors seeking capital growth may prefer lower payout ratios.
 capital gains (noun) Profit that results from a disposition of a capital asset, such as stock, bond, or real estate due to arbitrage.

 Use a company's current ratio to evaluate its shortterm financial strength
Current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months.
 The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months.
 Current ratio = current assets / current liabilities.
 This may also indicate problems in working capital management.
 This can allow a firm to operate with a low current ratio.
 working capital management (noun) Decisions relating to working capital and short term financing are referred to as working capital management [19].
These involve managing the relationship between a firm's shortterm assets and its shortterm liabilities.
 current ratio (noun) current assets divided by current liabilities

 An example of a financial ratio is the current ratio, used to determine a company's liquidity, or its ability to meet its short term obligations.
 A publicly traded company's stock price can also be a variable used in the computation of certain ratios, such as the price/earnings ratio.
 Capital Acquisition Ratio = (cash flow from operations  dividends) / cash paid for acquisitions.

The capital acquisition ratio reflects the company's ability to finance capital expenditures from internal sources.
 A ratio of less than 1:1 (100 %) indicates that capital acquisitions are draining more cash from the business than they are generating revenues.