Nishi Sir's Ratios

Sr # RATIOS FORMULA EXPRESSED AS SUITABILITY PURPOSE Remarks

Gross Profit X 100 Net To Judge

1 Gross Profit Ratio Percentage % High Ratio Operating Effeciency of Co
sales Profitability
2 Net Profit Ratio
a) Op Net Profit Op Net Profit To Judge
X 100 Percentage % High Ratio
Ratio Net sales Profitability

b) Net Profit NPBT To Judge

X 100 Percentage % High Ratio
Before Tax Ratio Net sales Profitability

c) Net Profit After N P A T X 100 Net To Judge

Percentage % High Ratio
Tax Ratio sales Profitability
COS + Op Exp X 100 To know Op cost &
3 Op Ratio Percentage % Low Ratio
Net sales Profit
Adm Exp / S&D EXP / Finc
X 100 To know Op cost & All Operating
4 Expense Ratio exp / Dep Exp Percentage % Low Ratio
Profit Expenses
Net sales

Total Op Exp X 100 To know Op cost &

Percentage % Low Ratio
Net sales Profit
Stock T/O Ratio To know Stock
COS
5 (stock Velocity Average R M Stock Times High Ratio Turnover &
Ratio) Management
Raw Material Consumed To know Stock
a) Raw Material
Average R M Times High Ratio Turnover &
T/O Ratio
Stock Management
b) Work In COP
To know Stock
Progress T/O Average W I P Stock Times High Ratio Turnover & Cost Of Production
Ratio Management
Current Assets Pure Ratio (std To know short term
6 Current Ratio High Ratio
Current Liabilities 2:1) Solvency
To know immediate
Quick Assets Pure Ratio (std CA-STK-PP EXP CL-
7 Quick Ratio High Ratio Solvency
Quick Liabilities 1:1) (LiquidRatio) BankOD-C.C.

Stk Working Closing Stock x 100 Percentage % To know extent of WC = CA - CL (net

8 Low Ratio
Capital Ratio Working Capital (std <100%) WC invested in stock WC)

To judge Long Term

Properietory Ratio Prop's Funds x 100 Percentage %
9 Total Assets High Ratio Solvency & Stability FA + CA + Invt.
/ Equity Ratio (std >50%)
(excl Misc Exp) of Co.
Debt(Long Term Loans) To judge Long Term
Debt / Equity Pure Ratio (std
10 Equity (Share Low Ratio Solvency & Stability
Ratio Holders Funds) <2:1)
of Co.
Funds with Fix Interest To judge Long Term
Capital Gearing Pure Ratio (std < FixInt.=Loans+Pref Sh
11 Funds with Low Ratio Solvency & Stability nonFixInt=EqSh-PrefSh
Ratio Fluctuating Int. 1)
of Co.
Return On Op Net Profit + Int. x 100 To know overall
(Share holders Funds
12 Inestent / Capital Capital Eployed. Percentage % Low Ratio Pfofitability Earned
+ LongTermLoans)
Employed (SHF + Long Term Loans) compared to T.F.
Return On Total N.P.B.T. + Interest To know overall Total Assets =
13 Assets / Total Total Assets (Ecept Percentage % High Ratio Pfofitability Earned FA+Inv+CA OR SHF +
Resoures Misc. Exp) (Total Resources) to T.F. LTL+CL
Return On Prop. NPAT + Interest X 100 % of Profit Earned
14 Share Holders Percentage % High Ratio
Funds Fund on Prop Funds

Return On Eq Sh. NPAT - Pref. Dividend % of Profit Earned

15 Prop Fund - Pref Percentage % High Ratio
Holders Funds Sh Cap on Eq Sh H. Fund
 Nishi Sir's Ratios

OpDRS+cl Drs / 2 IF
Debtors Turn Net Credit Sales Collection From
16 Times High Ratio no op DRs given, take
Over Ratio Average Drs & Bills Rec. Debtors in Year
Cl Drs
Avg Colletion Avg Drs & B. R. X 365D Credit Period OR devide by 12 M /
Period / Age of Net Credit Sales D/M Short Period
Allowed to Debtors 52 Weeks
Drs
Creditors Turn Net Credit Purhases Payments to
17 Average Crs & Bills Times High Ratio
Over Ratio Pay. Creditors in Year
Avg Payent
Avg Crs & B. P. X 365D Cr. Period Allowed OR devide by 12 M /
Period /Age of Times High Ratio
Net Credit Sales by Creditors 52 Weeks
Crs
Earning Per NPAT - Pref Diidend No To Know Profit & Kt
18 Of equity Shares Rs High Ratio
Share (E.P.S.) Price of Shares
Price Earning Market Price Of shares Provide guidene for
19 E.P.S Times Low Ratio
Ratio (P.E.) investments
% of NP distributed
a) Total Dividend on Eq
by way of Dividend
& Pref Shares X 100
NPAT High Ratio ~ Liberal
Dividend PayOut
20 Percentage % High Ratio Dividend Policy and
Ratio (D/P Ratio)
Low Ratio ~
b) EQ Dividend Per
Conservative
Share X 100
EPS dividend Policy
Yield Ratio a) Equity Dividend Per it gives dividend and
a) Dividend Yield Share X 100 earning % on the MKT
Price of the shares;
21 Ratio
MKT Price
Percentage % High Ratio also represents the
b) Earning Yield EPS X 100 real dividend rate /
Ratio MKT Price earning rate

NPAT+ Dep. & other non To Judge the

Debt Service cash EXP + Int capacity of
22 > 1 or < 1 High Ratio
Coverage Ratio Interest + Loan Installment Borrower to pay int
p.a. and Loan Instal
To Judge Profit
NPBT-TAX& int. =
Interest Coverage NPBT + Interest availabvle for
23 Times High Ratio NPAT + TAX Int on
Ratio Interest paying interst and
Loans
Installment
FA Turn Over Sales / COS
24
Ratio Net FA
Capital Turnover Sales / COS
25
Ratio Capital Employed
Working Capital Sales / COS
26
TO Ratio Working Capital

Sales
27 Assets T/O ratio Average Assets

Pref Dividend NPAT (before Pref Div)

28 Pref Dividend
Coverage Ratio
Eq Dividend NPAT - Pref Div
29 EQ Dividend
Coverage Ratio
FA to SHFund Fixed Assets
30
Ratio Share Holders Funds

Debt
31 Debt Assets Ratio Assets

Return on Assets Net Profit

32 Average Assets or Sales
Ratio