5. • The current ratio is a liquidity ratio that is used to calculate a companies ability
to meet its short-term debt and obligations.
• A current ratio less than one is an indicator that the company may not be able
to service its short-term debt.
• Current ratio = current assets/current liabilities
=5495/2879
=1.90:1
6. • It measures the ability of a company to meet its short term financial obligations
with quick assets
• It is mostly used by the analysts in analyzing the creditworthiness of a company
or assessing how fast it can pay off its debts if due for payment right now.
• Quick ratio=Quick assets/current liability
Quick assets=current assets-inventories
=5495-898
=4597
:.Quick ratio=4597/2879
=1.59:1
7. • It is a liquidity metric that indicates a company’s capacity to pay off short term
debt obligations with its cash and cash equivalents compared to other liquidity
ratios such as the current ratio and quick ratio.
• The cash ratio is a stricter, more conservative measure because only cash and cash
equivalents – a company’s most liquid assets – are used in the calculation.
• Cash position ratio=cash and cash equvalents/current liability
=27/2879
=0.009:1
8. • The working capital ratio is the ratio that helps in assessing the financial
performance and the health of the company
• where the ratio of less than 1 indicates the probability of financial or
liquidity problems in the future to the company
• working capital ratio=Cost of goods sold/ working capital
working capital = current assets - current liability
= 5495-2616
working capital turn over ratio = 10,577/2616 = 4.04:1
9. • The debt-to-equity ratio or D/E ratio is an important metric in finance that
measures the financial leverage of a company and evaluates the extent to which
it can cover its debt.
• It is calculated by dividing the total liabilities by the shareholder equity of the
company.
• It shows the proportion to which a company is able to finance its operations via
debt rather than its own resources.
• It is also a long-term risk assessment of the capital structure of a company and
provides insight over time into its growth strategy.
Debt-equity ratio = long term liability / share holders fund
= 0/10,794 = 0:1
10. • The equity ratio is a financial metric that measures the amount of leverage used by a
company.
• It uses investments in assets and the amount of equity to determine how well a company
manages its debts and funds its asset requirements.
• A low equity ratio means that the company primarily used debt to acquire assets, which is
widely viewed as an indication of greater financial risk.
• Equity ratios with higher value generally indicate that a company’s effectively funded its
asset requirements with a minimal amount of debt.
Equity ratio = share holders fund / equities & liabilities
= 10,794 / 14282 = 0.75:1
11. • The return on equity (ROE) is a measure of the profitability of a
business in relation to the equity.
• Because shareholder's equity can be calculated by taking all assets and
subtracting all liabilities.
• ROE can also be thought of as a return on assets minus liabilities.
• ROE measures how many dollars of profit are generated for each dollar
of shareholder's equity.
• ROE is a metric of how well the company utilizes its equity to generate
profits
ROE = net income / equity = 10,123 / 10,794
= 0.94:1
12. • Asset turnover (ATO), total asset turnover, or asset turns is
a financial ratio that measures the efficiency of a company's use of
its assets in generating sales revenue or sales income to the company.
• Asset turnover is considered to be an Activity Ratio, which is a group of
financial ratios that measure how efficiently a company uses assets.
• As a financial and activity ratio, and as part of DuPont analysis, asset
turnover is a part of company fundamental analysis
Asset turnover ratio = revenue / total assets
= 10,577/14,282 = 0.74:1
13. • Receivable Turnover Ratio or Debtor's Turnover Ratio is
an accounting measure used to measure how effective a company is in extending
credit as well as collecting debts.
• The receivables turnover ratio is an activity ratio, measuring how efficiently a
firm uses its assets.
• A high ratio implies either that a company operates on a cash basis or that its
extension of credit and collection of accounts receivable is efficient.
• While a low ratio implies the company is not making the timely collection of
credit.
Receivable turnover ratio = reveune / accounts receivabel
= 10,577/1170 = 9.04:1
14. • The inventory turnover ratio, also known as the stock turnover ratio, is an efficiency ratio
that measures how efficiently inventory is managed.
• The inventory turnover ratio formula is equal to the cost of goods sold divided by total or
average inventory to show how many times inventory is “turned” or sold during a period.
• The ratio can be used to determine if there are excessive inventory levels compared to
sales.
15. The gross profit ratio (or gross profit margin) shows the gross profit as a percentage of net sales. The ratio
provides an indication of the company’s pricing policy.
Certain businesses aim at a faster turnover through lower prices. Such businesses would have a lower gross
profit percentage but a larger volume of sales.
The gross profit ratio is a measure of the efficiency of production/purchasing as well as pricing.
The higher the gross profit, the greater the efficiency of management in relation to production/purchasing and
pricing.
16. • Operating profit ratio establishes a relationship between operating Profit
earned and net revenue generated from operations (net sales).
• operating profit ratio is a type of profitability ratio which is expressed as a
percentage.
• Net sales include both Cash and Credit Sales, on the other hand,
Operating Profit is the net operating profit i.e. the Operating Profit before
interest and taxes.
• Operating Profit ratio helps to find out Operating Profit earned in
comparison to revenue earned from operations
17. • Net profit ratio (NP ratio) is a popular profitability ratio that shows the
relationship between net profit after tax and net sales revenue of a
business entity.
• It shows the amount of profit earned by an entity for each dollar of sales
and is computed by dividing the net profit after tax by the net sales for the
period concerned.
• Net profit ratio is also frequently referred to as profit margin on sales.
18. • This ratio shows the proportion of total assets of a company which are
financed by proprietors’ funds.
• The proprietary ratio is also known as equity ratio.
• It helps to determine the financial strength of a company & is useful for
creditors to assess the ratio of shareholders’ funds employed out of total
assets of the company.
19. • Fixed Assets ratio is a type of solvency ratio (long-term solvency) which
is found by dividing total fixed assets (net) of a company with its long-
term funds. It shows the amount of fixed assets being financed by each
unit of long-term funds.
• It helps to determine the capacity of a company to discharge its
obligations towards long-term lenders indicating its financial strength and
ensuring its long-term survival.
