The document defines and provides the formulas for 11 common financial ratios used to analyze a company's performance and financial situation. These ratios include the current ratio, quick ratio, net working capital ratio, gross profit ratio, net profit ratio, operating profit margin, operating ratio, return on capital employed, return on equity shareholders, return on investment, and earnings per share. The formulas use various elements of a company's financial statements such as assets, liabilities, revenues, expenses, profits, and shareholder equity to calculate important performance metrics.

1. Ratio analysis

2. 1) CURRANT RATIO
C.R= CURRANT ASSET / CURReNT LIABILITIES
C.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. 2) QUICK OR LIQUID RATIO
Q.R= LIQUID ASSETS / LIQUID LIABILITIES
Liquid assets = current assets –stock – prepaid
exp
Liquid LIABILITIES = current LIABILITIES - bank
overdraft

4. 3) Net working capital ratio
n.w.c.r = net working capital / total
assets
Net working capital = current assets –
current liabilities
Total assets = fixed assets + investment +
current assets

5. 4) Gross profit ratio
g.p.r = gross profit / net sales × 100
g.P = sales – cost of goods sold
Net sales = gross sale – sale
return

6. 5) Net profit ratio
n.p.r = net profit after tax / net
sales × 100

7. 6) Operating profit margin
o.p.m = operating net profit / net
sales × 100
o.n.p = gross profit + operating inc
- operating exp

8. 7) Operating ratio
o.R = cogs +operating exp / sales ×100
Operating exp = office & administrative exp
+ selling & distribution + finance
exp
Cogs = op. stock + net purchases + direct wages
+ direct materials + other factory exp –
closing stock

9. 8) Return on capital employed
r.o.c.e = net operating profit /
capital employed × 100
Capital employed = equity capital +
pref. capital +
borrowed fund –
fictions assets

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. 10) Return on investment
r.o.i = n.p.a. interest & tax /
shareholders fund × 100

12. 11) Earning per share
e.p.s = n.p.a.t – pref. dividend / no. of
equity share