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BYD Company Limited
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=== Financial Ratios === The following table summarises how the evolution of the key financial ratios since 2013. <ref name=":0" /> {| class="wikitable" !Year !2022 !2021 !2020 !2019 !2018 !2017 !2016 !2015 !2014 !2013 |- |Debt / Equity Ratio |0.2 |0.37 |0.92 |1.26 |1.07 |1.03 |0.82 |1.17 |1.19 |1.14 |- |Debt / EBITDA Ratio |0.49 |1.63 |2.12 |4.22 |3.67 |3.98 |2.82 |3.61 |4.8 |4.73 |- |Debt / FCF Ratio |0.5 |1.26 |1.56 | -12.15 | -11.13 | -6.72 | -2.84 | -4.46 | -3.53 | -7.46 |- |Quick Ratio |0.44 |0.66 |0.67 |0.67 |0.11 |0.09 |0.1 |0.1 |0.09 |0.13 |- |Current Ratio |0.72 |0.97 |1.05 |0.99 |0.99 |0.98 |1 |0.82 |0.77 |0.68 |- |Asset Turnover |0.86 |0.73 |0.78 |0.65 |0.67 |0.59 |0.71 |0.69 |0.62 |0.69 |- |Interest Coverage |16.36 |3.98 |3.91 |2.05 |1.36 |2.31 |3.33 |2.09 | -0.13 |0.1 |- |Return on Equity (ROE) |14.97% |3.20% |10.57% |2.84% |5.04% |7.39% |9.86% |8.74% |1.71% |2.55% |- |Return on Assets (ROA) |3.37% |1.03% |2.99% |0.83% |1.43% |2.28% |3.48% |2.44% |0.46% |0.72% |- |Return on Capital (ROIC) |13.36% |5.05% |9.70% |4.83% |3.01% |4.24% |5.34% |3.76% | -0.27% |0.21% |} Between 2021 and 2022, some of the financial ratios have changed drastically. The Debt/EBITDA ratio has decreased by 70% from 1.63 to 0.49 as the company's earnings has increased significantly in relation to its debt, putting the business in a better position to pay off the incurred debt. <ref>[https://www.investopedia.com/terms/d/debt_edbitda.asp#:~:text=Debt%2FEBITDA%E2%80%94earnings%20before%20interest,pay%20off%20its%20incurred%20debt. https://www.investopedia.com/terms/d/debt_edbitda.asp#:~:text=Debt%2FEBITDA%E2%80%94earnings%20before%20interest,pay%20off%20its%20incurred%20debt.]</ref> The Debt/FCF ratio has also plummeted from 1.26 to 0.5 by 60%. This is another coverage ratios which reinforces that the cash generated by the company puts it in a healthy position to cover all its debt. <ref>https://www.investopedia.com/terms/c/cash-flowtodebt-ratio.asp</ref> The return on equity has increased by 11.77% in 2022. Return on equity is the ratio of net income to shareholder's equity. Higher net income stems from the growth in revenue which ultimately increases the return on equity. <ref>https://www.investopedia.com/terms/r/returnonequity.asp</ref> The significant growth in revenue over last year fuels the optimistic forecasts (for revenue and EPS) and the substantial changes observed in the financial ratios. The new product range offered by BYD to its customers that are looking for an affordable transition to electric vehicles, entry into the European market and government policies promoting the transition to sustainable transportation have been the fundamental driving factors in revenue growth observed since 2021.
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