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Ratios

The document defines and explains various financial ratios used to analyze the financial health and performance of a company. These include current ratios, acid test ratio, debt-equity ratio, proprietary ratio, gross profit ratio, net profit ratio, turnover ratios, return on assets, return on equity, earnings per share, price-earnings ratio, debt service coverage ratio, and dividend coverage ratio. Formulas are provided for calculating each ratio.

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35 views

Ratios

The document defines and explains various financial ratios used to analyze the financial health and performance of a company. These include current ratios, acid test ratio, debt-equity ratio, proprietary ratio, gross profit ratio, net profit ratio, turnover ratios, return on assets, return on equity, earnings per share, price-earnings ratio, debt service coverage ratio, and dividend coverage ratio. Formulas are provided for calculating each ratio.

Uploaded by

poorva9096
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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acurent ratio= current asset/current liabilities

the ideal current ratio prefered by banks is 1.33:1 anything below this is not
favorable

net working capital =current asset- current liability

net worth=capital +reserves

outside liabilities = term loan + bank loans +creditors+provisons

acid test ratio=quick current asset /current liabilties

quick current asset= total current asset-inventory

quick ratio= current asset/current liabilty\

quick asset ratio must be 1:1

debt equity ratio= long term outside liabilities/tangiable net worth

tangiable net worth= total of capital+reserves and surplus-intangible assets

long term liability=liabilities of long term nature

proprietary ratio=(tangible net worth /total tangiable assets)*100

gross profit ratio=(gross profit/net sales)*100

gross profit ratio=(sales-cogs/net sales)*100

gross profit margin = gros profit/revenue *100


operating profit ratio=(operating profit/net sales)*100

net profit ratio =(net profit/net sales)*100

stock turnover ratio= (cogs/avg inventory )*no of days

avg stock =(opening stock +closing stock)/2

debtors turnover ratio=(avg debators/sales)*365 days

debtaors collection period = days/credit sales*12 FOR MONTHS

=days/credit sales*365 FOR DAYS

asset turnover ratio =net sales/tangiable assets

fixed asset turnover ratio = net sales/fixed assets

current asset turnover ratio =net sales/current assets

creditors turnover ratio = (avg creditors/purchses)*365 FOR DAYS

return on assets = net profit after taxes/total assets


return on capital employeed =(net profit before intrest and tax/avg capital
employed)*100

return on equity capital =net profit after tax and preferences/tangiable net worth

earning per share=net profit after taxes and preferences dividend/no of equity
shares.

price earning ratio=market price per equity share/earning per share

debt service coverage ratio=

profit after tax+depre+annual interset on term loan

/annual interest on long term loans+annual installmets payable on long term


loans

Dividend coverage ratio=earning available-preference dividend/dividend to equity


share holder

Debt service coverage ratio= ebit/intrest+(principla repayment/1-tax rate)

=eat+depreciation+term loan intrest/intrst+installment

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