A) balance sheet ratio

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A) balance sheet ratio

  1. 1. Ratio analysis
  2. 2. 1) CURRANT RATIOC.R= CURRANT ASSET / CURReNT LIABILITIESC.A=CASH, BANK, STOCK, DEBTORS, BILLS RECEIVABLE PREPAID EXPENSES, MARKET INVESTMENT, SHORT TERM LOAN (GIVEN)C.L=O/S EXPENCES, BILLS PAYABLE, CREDITORS, SHORT TERM LOAN (RECEIVE), BANK OVERDRAFT, PROVISION FOR TAX , PROPOSE DIVIDENT
  3. 3. 2) QUICK OR LIQUID RATIOQ.R= LIQUID ASSETS / LIQUID LIABILITIESLiquid assets = current assets –stock – prepaid expLiquid LIABILITIES = current LIABILITIES - bank overdraft
  4. 4. 3) Net working capital ration.w.c.r = net working capital / total assetsNet working capital = current assets – current liabilitiesTotal assets = fixed assets + investment + current assets
  5. 5. 4) Gross profit ratiog.p.r = gross profit / net sales × 100g.P = sales – cost of goods soldNet sales = gross sale – sale return
  6. 6. 5) Net profit ration.p.r = net profit after tax / net sales × 100
  7. 7. 6) Operating profit margino.p.m = operating net profit / net sales × 100o.n.p = gross profit + operating inc - operating exp
  8. 8. 7) Operating ratioo.R = cogs +operating exp / sales ×100Operating exp = office & administrative exp + selling & distribution + finance expCogs = op. stock + net purchases + direct wages + direct materials + other factory exp – closing stock
  9. 9. 8) Return on capital employedr.o.c.e = net operating profit / capital employed × 100Capital employed = equity capital + pref. capital + borrowed fund – fictions assets
  10. 10. 9) Return on equity shareholders r.o.e.s = n.p.a.t – pref. dividend / shareholders fund Shareholders fund = equity capital+ general reserve+ reserve fund - fictitious assets
  11. 11. 10) Return on investmentr.o.i = n.p.a. interest & tax / shareholders fund × 100
  12. 12. 11) Earning per sharee.p.s = n.p.a.t – pref. dividend / no. of equity share

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