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Ratio Analysis All Formula

This document outlines different types of financial ratios used to analyze businesses. It describes liquidity ratios that measure a company's ability to meet short-term obligations, leverage/capital ratios that indicate financial risk, activity ratios about efficiency of asset use, and profitability ratios concerning operating performance and return on investments. The ratios are categorized based on what they measure - liquidity, capital structure, operations, or profitability - and calculations for common metrics are provided.

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Chandra Sekhar
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5K views9 pages

Ratio Analysis All Formula

This document outlines different types of financial ratios used to analyze businesses. It describes liquidity ratios that measure a company's ability to meet short-term obligations, leverage/capital ratios that indicate financial risk, activity ratios about efficiency of asset use, and profitability ratios concerning operating performance and return on investments. The ratios are categorized based on what they measure - liquidity, capital structure, operations, or profitability - and calculations for common metrics are provided.

Uploaded by

Chandra Sekhar
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 PPTX, PDF, TXT or read online on Scribd
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TYPES OF RATIOS

Liquidity ratios LEVERAGE/CAPITAL RATIOS ACTIVITY RATIOS

PROFITABILITY RATIOS
LIQUIDITY RATIOS

CURRENT ACID TEST/QUICK CASH/ABSOLUTE


RATIO RATIO LIQUIDITY RATIO
{CURRENT {(CURRENT ASSETS- {(CASH+MARKETABLE
ASSETS:CURRENT INVENTORIES):CURRENT SECURITIES):CURRENT
LIABILTIES}
LIABILTIES} LIABILITIES}

BASIC DEFENSE INTERVAL


{(CASH+RECEIVABLES+MARKETABLE NET WORKING CAPITAL RATIO
SECURITIES):[(OPERATING [Current Assets - Current Liabilities
EXPENSES+INTEREST+INCOME (excluding short-term bank
TAXES)/365]} borrowing)]
CAPITAL STRUCTURE/LEVERAGE RATIOS

CAPITAL STRUCTURE RATIOS COVERAGE RATIOS


DEBT SERVICE COVERAGE RATIO
[EARNINGS AVAILABLE FOR DEBT
EQUITY RATIO SERVICE:(INTEREST+INSTALLMENTS)]
(SHAREHOLDER’S EQUITY:TOTAL
CAPITAL EMPLOYED) INTEREST COVERAGE RATIO
(EBIT:INTEREST)
PREFERENCE DIVIDEND COVERAGE
DEBT RATIO RATIO
(TOTAL DEBT:CAPITAL EMPLOYED) (EAT:PREFERENCE DIVIDEND
LIABILITY)
CAPITAL GEARING RATIO
[(PREF SHARE CAPT+DEBEN+LONG
DEBT TO EQUITY RATIO TERM LOANS):(EQUITY SH
(TOTAL CAP+RESERVES&SURPLUS-LOSSES)]
LIABILITIES:SHAREHOLDER’S
EQUITY) (FIXED ASSESTS:LONG TERM FUNDS)
PROPRIETORY RATIO
(PROPRIETORY FUND:TOTAL ASSETS)
ACTIVITY RATIOS

CAPITAL FIXED ASSETS WORKING CAPITAL


TURNOVER RATIO TURNOVER RATIO TURNOVER RATIO
(SALES:CAPITAL (SALES:CAPITAL ASSETS) (SALES:WORKING
EMPLOYED) CAPITAL)

INVENTORY TURNOVER DEBTORS TURNOVER CREDITORS TURNOVER


RATIO RATIO RATIO
(SALES:AVERAGE (CREDIT SALES:AVERAGE (CREDIT
INVENTORY) OR ACCOUNTS RECEIVABLE) PURCHASES:AVERAGE
(COST OF SALES:AVERAGE A/CS PAYABLE)
STOCK) AS WELL AS
AVERAGE COLLECTION
(RAW MATERIAL AVERAGE PAYMENT PERIOD
PERIOD
CONSUMED:AVERAGE R.M (AVERAGE A/CS
(AVERAGE A/CS
STOCK) IN CASE OF RAW PAYABLE:AVERAGE DAILY
RECIEVABLE:AVERAGE
MATERIALS CREDIT PURCHASES)
DAILY CREDIT SALES)
AVERAGE CREDIT SALES AVERAGE CREDIT
(CREDIT SALES:365) PURCHASES
(CREDIT PURCHASES:365)
PROFITABILITY RATIOS

BASED ON BASED ON ASSETS/


REQUIREMENT INVESTMENTS
FOR ANALYSIS
FROM OWNERS
POINT OF VIEW

BASED ON SALES BASED ON CAPITAL


OF THE FIRM MARKET INFORMATION
PROFITABILITY RATIOS REQUIRED FOR ANALYSIS FROM OWNERS POINT OF VIEW

RETURN OF EARNINGS PER SHARE DIVIDEND PER PRICE EARNING


EQUITY (NET PROFIT AVAILABLE SHARE RATIO
(PROFIT AFTER TO EQUITY (TOTAL PROFITS (MARKET PRICE
TAX:NET WORTH) SHAREHOLDERS:NO,OF DISTRIBUTED TO EQ. PER
ORDINARY SHARES SHAREHOLDERS:NO, SHARE:EARNINGS
OUTSTANDING OF EQ. SHARES) PER SHARE)

t M OD EL
ER D u-Pon PLIER)
I TY UND Y MU LTI
F EQ U (EQUI T
R N O E R)
N OF RETU T T URNOV
MP O SITIO RGIN)(ASSE
CO F I T MA
RO
(NET P

NET PROFIR MARGIN ASSET TURNOVER EQUITY MULTIPLIER


(NET (REVENUE:ASSETS) (ASSETS:SHAREHOLDER’S
INCOME:REVENUE) EQUITY)
PROFITABILITY RATIOS BASED ON ASSETS/INVESTMENTS

RETURN ON RETURN ON INVESTMENT RETURN ON ASSETS


CAPITAL EMPLOYED [(RETURN:CAPITAL (NET PROFIT AFTER
[(RETURN:CAPITAL EMPLOYED)*100] OR TAXES:AVERAGE TOTAL
EMPLOYED)*100] (PROFITABILITY RATIO) ASSETS) OR
(CAPITAL TURNOVER RATIO) (NET PROFIT AFTER
TAXES:AVERAGE
TANGIBLE/FIXED ASSETS)

PROFITABILITY RATIO CAPITAL TURNOVER RATIO


[(RETURN:SALES)*100] (SALES:CAPITAL EMPLOYED)
PROFITABILITY RATIOS BASED ON SALES OF FIRM

GROSS PROFIT RATIO OPERATING PROFIT NET PROFIT RATIO


[(GROSS PROFIT:SALES)*100] RATIO [(NET
[(OPERATING PROFIT:SALES)*100]
PROFIT:SALES)*100]

P/V RATIO
{[(SALES-VARIABLE OPERATING PROFIT
COST):SALES]*100} (SALES-COST OF SALES)
PROFITABILITY RATIOS BASED ON CAPITAL MARKET INFORMATION

PRICE-EARNING RATIO YIELD


(AVERAGE SHARE PRICE:EPS) [(DIVIDEND:AVERAGE SHARE
OR PRICE)*100] OR
(CLOSING SHARE PRICE:EPS) [(DIVIDEND:CLOSING SHARE
PRICE)*100]

(MARKET VALUE PER SHARE)/(BOOK VALUE PER SHARE)


[AVERAGE SHARE PRICE:(NET WORTH/NO, OF EQ. SHARES)]
OR
[CLOSING SHARE PRICE:(NET WORTH/NO, OF EQ. SHARES)]

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