This document defines and provides formulas for various types of accounting ratios used to evaluate business performance. There are 4 main categories of ratios: liquidity, solvency, activity/turnover, and profitability. Example ratios include the current ratio, debt to equity ratio, debtor turnover ratio, gross profit ratio, and return on investment ratio. Formulas are provided for each ratio to calculate it based on values from a company's financial statements.

1. Types and Formulae of ACCOUNTING RATIOS

2. ACCOUNTING RATIO is an arithmetical expression of
relationship between two interrelated or related items.

3. 1. Liquidity Ratios
2. Solvency Ratios
3. Activity or Turnover ratios
4. Profitability Ratios

4. 1. Current Ratio
2. Liquid Ratio/Acid Test Ratio/Quick Ratio

5. Current ratio = current assets/current liabilities

6. Liquid ratio = liquid assets/current liabilities

7. 1. Debt to equity ratio
2. Total assets to debt ratio
3. Proprietary ratio
4. Interest coverage ratio

8. DER = debt/equity

9. TADR = total assets/debt

10. PR = shareholders’ fund/total assets

11. ICR = net profit before interest&tax/interest

12. 1. Debtor turnover ratio
2. Creditor turnover ratio
3. Inventory or stock turnover ratio
4. Working capital turnover ratio

13. DTR = net credit sales/average dabtors+average bills

14. CTR = net credit purchases/average creditors+average bills

15. ITR = COGS/average stock

16. WCTR = sales/working capital

17. 1. Gross profit ratio
2. Net profit ratio
3. Operating ratio
4. Operating profit ratio
5. Return on investment (ROI) ratio

18. GPR = GP/sales *100

19. NPR = NP/sales *100

20. OR = COGS+operating expenses /sales *100

21. OPR = operating profit/sales *100

22. ROI = net profitbefore interest,tax&dividend/capital employed
*100