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Types and Formulae of ACCOUNTING RATIOS
ACCOUNTING RATIO is an arithmetical expression of
relationship between two interrelated or related items.
1. Liquidity Ratios
2. Solvency Ratios
3. Activity or Turnover ratios
4. Profitability Ratios
1. Current Ratio
2. Liquid Ratio/Acid Test Ratio/Quick Ratio
Current ratio = current assets/current liabilities
Liquid ratio = liquid assets/current liabilities
1. Debt to equity ratio
2. Total assets to debt ratio
3. Proprietary ratio
4. Interest coverage ratio
DER = debt/equity
TADR = total assets/debt
PR = shareholders’ fund/total assets
ICR = net profit before interest&tax/interest
1. Debtor turnover ratio
2. Creditor turnover ratio
3. Inventory or stock turnover ratio
4. Working capital turnover ratio
DTR = net credit sales/average dabtors+average bills
CTR = net credit purchases/average creditors+average bills
ITR = COGS/average stock
WCTR = sales/working capital
1. Gross profit ratio
2. Net profit ratio
3. Operating ratio
4. Operating profit ratio
5. Return on investment (ROI) ratio
GPR = GP/sales *100
NPR = NP/sales *100
OR = COGS+operating expenses /sales *100
OPR = operating profit/sales *100
ROI = net profitbefore interest,tax&dividend/capital employed
*100

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Accounting ratios