SL No Description

A LIQUIDITY RATIOS
1 Current Ratio
2 Quick Ratio or Acid test Ratio
3 Absolute Cash Ratio
4 Interval Measure
B CAPITAL STRUCTRE RATIOS
1 Equity to Total Funds Ratios
2 Debt Equity Ratio
3 Capital Gearing Ratio
4 Fixed Asset to Long Term Fund Ratio
5 Proprietary Ratios
C COVERAGE RATIOS
1 Debt Service Coverage Ratio
2 Interest Coverage Ratio
3 Preference Dividend Coverage Ratio
D TURNOVER RATIOS
1 Capital Turnover Ratio
2 Fixed Asset Turnover Ratio
3 Working Capital Turnover Ratio
4 Finished Goods or Stock Turnover ratio
5 WIP Turnover Ratio
6 Debtors Turnover ratio
7 Creditors Turnover ratio
E PROFITABILITY RATOS BASED ON SALES
1 Gross Profit ratio
2 Operating profit Ratio
3 Net profit Ratio
4 Contribution Sales Ratio
F PROFITABILITY RATOS OWNERS VIEW POINT
1
Return on investment (ROI) or return on capital
employed
2 Return on Equity
3 Earnings Per Share
4 Dividend Per Share
5 Return On Assets
Link
Current_Ratio
Quick_Ratio_or__Acid_test_Ratio
Absolute_Cash_Ratio
Interval_Measure
Equity_to_Total_Funds_Ratios
Debt_Equity_Ratio
Capital_Gearing_Ratio
Fixed_Asset_to_Long_Term_Fund_Ratio
Proprietary_Ratios
Debt_Service_Coverage_Ratio
Interest_Coverage_Ratio
Preference_Dividend_Coverage_Ratio
Capital_Turnover_Ratio
Fixed_Asset_Turnover_Ratio
Working_Capital_Turnover_Ratio
Finished_Goods_or_Stock_Turnover_ratio
WIP_Turnover_Ratio
Debtors_Turnover_ratio
Creditors_Turnover_ratio
Gross_Profit_ratio
Operating_profit_Ratio
Net_profit_Ratio
Contribution_Sales_Ratio
Return_on_investment__ROI__or_return_on_capital_employed
Return_on_Equity
Earnings_Per_Share
Dividend_Per_Share
Return_On_Assets
No Ratio Formula Numerator
1 Current Ratio
Current Assets
Current Liabilities
Inventories
+ Debtors
+Cash & Bank
+Receivables/Accruals
+Short term Loans
+Marketable Investments
2
Quick Ratio or
Acid test Ratio
Quick Assets
Quick Liabilities
Current Assets
Less: Inventories
Less Prepaid Expenses
3 Absolute Cash Ratio
(Cash + Marketable securuties)
Current Liabilities
Cash In Hand
+Balance at Bank
+Marketable securuties & short
Term investments
4 Interval Measure
Quick Assets
Cash Expenses per Day
Current Assets
Less: Inventories
Less Prepaid Expenses
No Ratio Formula Numerator
1
Equity to Total Funds
Ratios
Share Holders Fund
Total Funds
Equity Share Capital
+Preference Share Capital
+Reserves and Surplus
Less Accumulated Losses
2 Debt Equity Ratio
Debt
Equity
Long term borrowed funds, ie
Debentures,Long term loans from
institutions
3 Capital Gearing Ratio
Fixed Charge Bearing Capital
Equity share holders Funds
Preference Share Capital
+Debentures
+ Long Term Loans
A. LIQUIDITY RATIOS - SHORT TERM SOLVENCY
B. CAPITAL STRUCTRE RATIOS-INDICATOR OF FINANCING TECHNIQUES AND LONG TERM SOLVENCY
4
Fixed Asset to Long
Term Fund Ratio
Fixed Assets
Long Term Funds
Net Fixed Assets ie
Gross Block
Less Depreciation
5 Proprietary Ratios
Proprietary Funds
Total Assets
Equity Share Capital
+ Preference Share Capital
+Reserves & Surplus
Less Accumulated Reserves
No Ratio Formula Numerator
1
Debt Service
Coverage Ratio
Earnings for Debt service
(Interest + Instalment)
Net Profit after Taxation
+ Taxation
+ Interest on Debt Funds
+ Non Cash Operating expense
+ Non Operating Adjustments
2
Interest Coverage
Ratio
Earnings before Interest & Tax
Interest
Sales
Less variable cost
Less Fixed Cost(excluding Int)
or
EAT+Tax+ Interest
3
Preference Dividend
Coverage Ratio
Earnings after Tax
Preference Dividend
EAT
No Ratio Formula Numerator
1
Capital Turnover
Ratio
Sales
Capital Employed
Sales net of returns
2
Fixed Asset Turnover
Ratio
Turnover
Fixed Assets
Sales Net of returns
3
Working Capital
Turnover Ratio
Turnover
Net Working Capital
Sales Net of returns
C. COVERAGE RATIOS - ABILITY TO SERVE FIXED LIABILITIES
D. TURNOVER / ACTIVITY / PERFORMANCE RATIOS
4
Finished Goods or
Stock Turnover ratio
Cost of Goods Sold
Average Stock
For Manufacturers
Opening Stock
+Cost fo production
less Closing stock
For Traders
Opening Stock
+ Purchases
Less Closing stock
5 WIP Turnover Ratio
Factory Cost
Average stock o WIP
Materials +wages+Production OH
6
Debtors Turnover
ratio
Credit Sales
Average Accounts receivable
Credit Sales net of returns
7
Creditors Turnover
ratio
Credit Purchases
Average Accounts payable
Credit Purchases Net of returns if
any
No Ratio Formula Numerator
1 Gross Profit ratio
Gross profit
Sales
Gross profit As per trading
Account
2 Operating profit Ratio
Operating profit
Sales
Sales Less Cost of sales
or
Net profit
Add Non operating expenses
Less Non operating Incomes
3 Net profit Ratio
Net profit
Sales
Net profit
4
Contribution Sales
Ratio
Contribution
Sales
Sales less Variable costs
No Ratio Formula Numerator
E. PROFITABILITY RATOS BASED ON SALES
F. PROFITABILITY RATOS OWNERS VIEW POINT
1
Return on investment
(ROI) or return on
capital employed
Total Earnings
Total capital Employed
Profit After Taxes
Add : Taxation
Add : Interest
Add: Non Trading Expenses
Add: Non Operating incomes like
rents,interest and dividends
2 Return on Equity
Earnings After Tax
Net Worth
Profit After Taxes
3 Earnings Per Share
(PAT-Preference Dividend)
Number of Equity Shares
Profit After Taxes
Less Preference Dividend
4 Dividend Per Share
Dividend
Number of Equity Shares
Profit distributed to equity share
holders
5 Return On Assets
Net Profit after Taxes
Average Total Assets
Net Profit After Taxes
Denominator Significance
Sundry Creditors (For Goods)
+Outstanding Expenses
+Short Term Loans & advances
+Bank Overdraft/ Cash Credit
+Provisio for Taxation
+Proposed or Unclaimed Dividend
Ability to repay short term
commitmnets prompltly. Ideal ratio is
2:1.High ratio indicates existence of
idle current assets
Current Liabilities
Less : Bank Overdraft
Less Cash Credit
Ability to meet immediate
liabilities.Ideal ratio is 1.33:1
Sundry Creditors (For Goods)
+Outstanding Expenses
+Short Term Loans & advances
+Bank Overdraft/ Cash Credit
+Provisio for Taxation
+Proposed or Unclaimed Dividend
Availibility of cash to meet short term
commitments
Annual Cash Expenses
365
Cash expenses=Total expenses Less
Depreciaton and write offs
Ability to meet regular cash
expenses
Denominator Significance
Total Long term Funds employed in
business =Debts+Equity
Indicates long term solvency; mode
of financing; extend of own funds
used in operations
Equity Share Capital
+ Preference Share Capital
+Reserves and Surplus
Less Accumulated losses if any
Indicates relationship between debt
& Equity, Ideal ratio is 2:1
Equity Share Capital
+ Reserves and Surplus
Less Accumulated Losses if any
Shows Proportion of fixed charge
(dividend or interest) bearing capital
to equity funds, the extend of
advantage or leverage enjoyed by
equity share holders
A. LIQUIDITY RATIOS - SHORT TERM SOLVENCY
B. CAPITAL STRUCTRE RATIOS-INDICATOR OF FINANCING TECHNIQUES AND LONG TERM SOLVENCY
Share Holders Fund
+ Debt Funds (Numerator
1+Numerator 2 as in 1 & 20
shows proprtion of Fixed Assets
finanaced by by long term funds.
Indicats the financing approach
followd by the
firm.conservative,matching or
aggressive; idea ratio is less than 1
Net Fixed Assets
+ Total Current Assets
(Only tangiable Assets will be included)
Shows extend of owners fund
utilised in financing assets
Denominator Significance
Interest on Debt
+ Instalment of Debt
(Principal Repaid)
Indicates extend of current earnings
available for meeting commitments
and outflow towards interest and
instalments; Ideal ratio must be
between 2 to 3 times
Interest on debt Fund
Indicates ability to meet interest
obligations of the current year.
Should be generally greater than 1
Dividend on Preference Share Capital
Indicates ability to pay dividend on
preference share capital
Denominator Significance
Equity share Capital
+ Preference Share Capital
+Reserves & Surplus
+ Debentures
+ Long Term Loans
Less Accumulated Losses
Ability to generate sales per rupee of
long term investment. The higher
the turnover ratio the better is
Net Fixed Assets
Ability to generate sales per rupee of
Fixed Asset
Current Assets Less Current liabilities
Ability to generate sales per rupee of
Fixed Assets
C. COVERAGE RATIOS - ABILITY TO SERVE FIXED LIABILITIES
D. TURNOVER / ACTIVITY / PERFORMANCE RATIOS
Opening Stock +Closing Stock
2
Maximum Stock + Minimum Stock
2
Indicates how fast inventory is used
/ Sold
A higher turnover ratio generally
indicates fast moving material while
low ratio may mean dead or
excessive stock.
Opening WIP+Closing WIP
2
Indicates the WIP movement
/Produaction cycle.
AR= Debtors+ BR
Average AR=
Opening Bal+Closing Bal
2
Indicates speed of collection of
credit sales
AP= Creditors+ BP
Average AP=
Opening Bal+Closing Bal
2
Indicates Velocity of debt payment
Denominator Significance
sales net of returns Indicator of basic profitability
sales net of returns
Indicator of Operating performance
of businesss
sales net of returns Indicator of overall profitabillity
sales net of returns
Indicator of profitability in marginal
costing
Denominator Significance
E. PROFITABILITY RATOS BASED ON SALES
F. PROFITABILITY RATOS OWNERS VIEW POINT
Asset Route:
Net fixed assets (Including intangiable
assets like patents,but not fictitiious
assets miscellaneous expenditure not
w/off)
+Net Working Capital
Liability Route
Equity Share Capital
+Prefence share capital
+reserves & Surplus
+Debentures and long term Loans
Less Accumulated Losses
Less Non trade Investments
Overall profitability of the business
for the capital employed; indicates
the return on the total capital
employed.
Comparison of ROCE with rate of
interest of debt leads to financial
leverage. If ROCE> Interest rate,
use of debt funds is justified
Net Fixed Assets
+Net working Capital
Less External Liabilites(Long Term)
Profitability of Equity funds invested
in the business
Number of Equity shares Outstanding=
Equity Share Capital
Face value per share
Return or income per share,
whether or not distributed as
dividends
Number of Equity shares Outstanding=
Equity Share Capital
Face value per share
Amounts of dividend distributed per
share
1/2 of Opening and Closing Balance
Net Income per rupee of average
fixed assets
Sheet3
BALANCE SHEET RATIOS: Stability (Staying Power)
1 Current
Current Assets
Current Liabilities
2 Quick
Cash + Accts. Rec.
Current Liabilities
3 Debt-to-Worth
Total Liabilities
Net Worth
INCOME STATEMENT RATIOS: Profitability (Earning Power)
4 Gross Margin
Gross Profit
Sales
5 Net Margin
Net Profit Before Tax
Sales
ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios
6 Sales-to-Assets
Sales
Total Assets
7 Return on Assets
Net Profit Before Tax
Total Assets
8 Return on Investment
Net Profit Before Tax
Net Worth
ASSET MANAGEMENT RATIOS: Working Capital Cycle Ratios
9 Inventory Turnover
Cost of Goods Sold
Inventory
10 Inventory Turn-Days
360 360
Inventory Turnover
11 Accounts Receivable Turnover
Sales
Accounts Receivable
12 Accounts Receivable Turn-Days
360 360
Accts. Rec. Turnover
13 Accounts Payable Turnover
Cost of Goods Sold
Accounts Payable
14 Average Payment Period
360 360
Accts. Pay. Turnover
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RATIO ANALYSIS SPREADSHEET
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