RATIO ANALYSIS FORMULAS
DEBT EQUITY RATIO = OUTSIDERS FUNDS(LONG TERM LIABILITY) / SHAREHOLDERS FUNDS
OUTSIDER FUNDS= DEBENTURES+SUNDRY CREDITORS+BANK+SECURED LOANS+ OVERDRAFT+TAX PROVISION+ BILLS PAYABLE(-) OUTSTANDING EXPENSES
SHARE HOLDRS FUNDS= EQUITY SHARE+PREFERENCE SHARES+RESERVE FUNDS+P&L
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES
CURRENT ASSETS= CASH & BANK BALANCE+SUNDRY DEBTORS+PREPAID EXPENSES+INVENTORY
CURRENT LIABILITY= SUNDRY CREDITORS+BANK OVERDRAFT+BILLS PAYABLE+O.S EXPENSES
NET WORTH RATIO = FIXED ASSETS / NET WORTH
FIXED ASSETS= LAND&BUILDING+PLANT&MACHINARY
NET WORTH= EQUITY SHARE+PREFERENCE SHARE+RESERVE+P&L – FICTITIOUS ASSETS(GOODWILL)
RETURN ON TOTAL ASSETS = NET PROFIT/ TOTAL ASSETS X 100
INVENTORY TURNOVER RATIO =COGS / INVENTORY
WORKING CAPITAL TO TURNOVER RATIO = NET SALES / WORKING CAPITAL
WORKING CAPITAL= CURRENT ASSETS(-) CURRENT LIABILITY
ABSOLUTE LIQUID RATIO = ABSOLUTE LIQUID ASSET / CURRENT LIABILITIES
ABSOLUTE LIQUID ASSET = BANK+SHORT TERM INVESTMENT
LIQUID ASSETS= CURRENT ASSETS – (STOCK + PREPAID EXPENSES)
QUICK ASSETS= SUNDARY DEBTORS+CASH AND BANK BALANCE
GROSS PRROFIT RATIO= GROSS PRROFIT/ NET SALES X 100
GROSS PROFIT= NET SALES – COGS
NET PROFIT RATIO= NETPROFIT AFTER TAX / NET SALES X 100
NET PROFIT= GROSS PROFIT – (OPERATING EXP + NON-OPERATING EXP)
OPERATING RATIO= OPERATING COST / NET SALES X 100
OPERATING COST(EXPENSE)= COGS+OPERATING EXPENCES+ADMINIS EXP+SELLING & DISTRIBUTIONS+DEPRECIATION
OPERATING PROFIT RATIO=OPERATING PROFIT / NET SALES X 100
OPERATING PROFIT= GROSS PROFIT – OPERATING EXPENSES
STOCK TURNOVER RATIO= COGS / AVERAGE STOCK
COGS= NET SALES – GROSS PROFIT
AVERAGE STOCK= (OPENING STOCK+CLOSING STOCK)/2
FIXED ASSETS TURNOVER RATIO= NET SALES / NET FIXED ASSETS
TOTAL ASSETS TURNOVER RATIO= NET SALES / TOTAL ASSETS
TOTAL ASSETS= FIXED ASSETS+CURRENT ASSETS
LIQUID RATIO(ACID TEST RATIO OR QUICK) = QUICK ASSETS / QUICK LIABILITIES
QUICK ASSETS= CURRENT ASSETS – STOCK – PREPAID
QUICK LIABILITIES= CURRENT LIABILITIES – BANK OVERDRAFT
DEBTORS TURNOVER RATIO= NET CREDIT SALES (SALES) /DETORS
DETORS= DR’S + BILLS RECEIVABLES
RETURN ON INVESTMENTS= PROFIT BEFORE INCOME TAX / CAPITAL EMPLOYED X 100
PBIT= NET PROFIT
CAPITAL EMPLOYED= SHARE CAPITAL+GENERAL RESERVE+P&L – NON-OPERATING INCOMES
FIXED ASSETS TO CURRENT ASSET RATIO= FIXED ASSETS / CURRENT ASSETS
FIXED ASSET TO NET WORTH RATIO= FIXED ASSETS / NET WORTH
