Profit

100
Net income Sales
ProfitNet Profit margin=
Sales

Net income
Returnon assets /ROCE=
Total assets PBIT
100
Share capital + Reserves+ noncurrent liabilities
PBIT sales
ROCE= 100
Sales Net assets

ROCE=Profit margin Asset turnover 100

Profit after interest, tax and preference dividend

Ordinary share capital and reserves
Net income
Returnon equity=
Total equity
Gross profit
Sales

Gross profit margin = 100

Profitability Ratios 100 %

Liquidity or short-term solvency Ratios , Times

Current assets
Current ratio =
Current liabilities

Current assets Inventory

Quick Asset or Acid test or Quick ratio =
Current liabilities

Cash and Cash Equivalents

Cash ratio =
Current liabilities

Asset Management or Turnover or Efficiency Ratios

Sales
Total asset turnover = Sales
Total assets
Net assets
Asset turnover =

Cost of goods sold

Inventory turnover =
Inventory Inventory holding period =
365 days
Days sales in inventory = Average inventory
Inventory turnover Cost of sales
x 365

Sales
Receivables turnover =
Trade receivables
 365 days
Days sales in receivables =
Receivables turnover Receivables collection period =
Average trade receivable s
Credit sales
x 365

Costs of Goods sold

Trade payables
Payables Turnover =
Days sales in Payables
365 days
Payables Turnover
=
Payables payment period
Average trade payables
Credit purchases
= 365
days