This document discusses various types of financial ratios used for ratio analysis. It defines ratio analysis as a technique used to analyze and interpret financial statements to help with decision making. It then covers different types of ratios including liquidity ratios, activity ratios, solvency ratios, profitability ratios, and market test/valuation ratios. Specific ratios discussed include current ratio, quick ratio, inventory turnover ratio, debt-equity ratio, return on equity, earnings per share, and others. The document provides formulas and explanations for calculating and interpreting these various financial ratios.
Profitability Ratio
A profitability ratio is a measure of financial ratio defining the profit percent and return percent from the business using data from financial statements at a specific point of time
It assess business’s ability to generate gross profit, operating profit and net profit from the sales using data from profit& loss statement
It even takes into consideration various return generating ability of business in terms of return on assets, return on capital employed, return on equity, return on investment using data from balance sheet
Types of profitability ratio
Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio, Return on Assets, Return on Equity, Return on Investment, Return on Capital Employed
Gross Profit Ratio
Gross Profit Ratio(GPR) is a profitability ratio that shows the relationship between gross profit and the revenue from net sales
GPR = (퐆퐫퐨퐬퐬 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Net Profit Ratio
The net profit ratio is equal to how much net profit is generated as a ratio of revenue earned through sales
Net Profit Ratio = (퐍퐞퐭 푷풓풐풇풊풕)/(퐍퐞퐭 푺풂풍풆풔)
Operating Profit Margin is a profitability ratio used to calculate the percentage of operating profit a company produces from its operations, prior to deduction of taxes and interest charges
Operating Profit Ratio
Operating Profit Ratio = (퐎퐩퐞퐫퐚퐭퐢퐧퐠 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Return on assets (ROA) is a kind of profitability measure used to determine returns on assets relevant when compared across the companies or previous performance of the company
Return On Asset = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐀퐬퐬퐞퐭퐬)
Return on equity (ROE) is a measure of financial performance calculated by dividing net profit by average shareholders' equity
ROE = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐄퐪퐮퐢퐭퐲)
Return on capital employed is a profitability ratio used in valuation of company’s financial position depicting the return out of capital employed
ROCE = 퐄퐁퐈퐓/(퐂퐚퐩퐢퐭퐚퐥 퐄퐦퐩퐥퐨퐲퐞퐝)
Return on investment is a profitability measure used by businesses to identify the efficiency of business in generating return out of an investment
ROI = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐂퐨퐬퐭 퐨퐟 퐈퐧퐯퐞퐬퐭퐦퐞퐧퐭)
Ratio analysis refers to the analysis and interpretation of the data collected from the financial statements (i.e., Profit and Loss Statement, Balance Sheet and Fund/Cash Flow statement etc.)
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Profitability Ratio
A profitability ratio is a measure of financial ratio defining the profit percent and return percent from the business using data from financial statements at a specific point of time
It assess business’s ability to generate gross profit, operating profit and net profit from the sales using data from profit& loss statement
It even takes into consideration various return generating ability of business in terms of return on assets, return on capital employed, return on equity, return on investment using data from balance sheet
Types of profitability ratio
Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio, Return on Assets, Return on Equity, Return on Investment, Return on Capital Employed
Gross Profit Ratio
Gross Profit Ratio(GPR) is a profitability ratio that shows the relationship between gross profit and the revenue from net sales
GPR = (퐆퐫퐨퐬퐬 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Net Profit Ratio
The net profit ratio is equal to how much net profit is generated as a ratio of revenue earned through sales
Net Profit Ratio = (퐍퐞퐭 푷풓풐풇풊풕)/(퐍퐞퐭 푺풂풍풆풔)
Operating Profit Margin is a profitability ratio used to calculate the percentage of operating profit a company produces from its operations, prior to deduction of taxes and interest charges
Operating Profit Ratio
Operating Profit Ratio = (퐎퐩퐞퐫퐚퐭퐢퐧퐠 퐏퐫퐨퐟퐢퐭)/(퐍퐞퐭 퐒퐚퐥퐞퐬)
Return on assets (ROA) is a kind of profitability measure used to determine returns on assets relevant when compared across the companies or previous performance of the company
Return On Asset = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐀퐬퐬퐞퐭퐬)
Return on equity (ROE) is a measure of financial performance calculated by dividing net profit by average shareholders' equity
ROE = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐀퐯퐠.퐓퐨퐭퐚퐥 퐄퐪퐮퐢퐭퐲)
Return on capital employed is a profitability ratio used in valuation of company’s financial position depicting the return out of capital employed
ROCE = 퐄퐁퐈퐓/(퐂퐚퐩퐢퐭퐚퐥 퐄퐦퐩퐥퐨퐲퐞퐝)
Return on investment is a profitability measure used by businesses to identify the efficiency of business in generating return out of an investment
ROI = (퐍퐞퐭 퐏퐫퐨퐟퐢퐭)/(퐂퐨퐬퐭 퐨퐟 퐈퐧퐯퐞퐬퐭퐦퐞퐧퐭)
Ratio analysis refers to the analysis and interpretation of the data collected from the financial statements (i.e., Profit and Loss Statement, Balance Sheet and Fund/Cash Flow statement etc.)
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Marginal costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
Cost Volume Profit (CVP).
Introduction
Fixed costs
Variable costs
Semi variable costs
Contribution margin
Break even point
PV Ratio
BEP ANalysis.
break even point
Cost-volume-Profit.
Ratio: It is the quantitative relation between two amounts showing the number of times one value contains or is contained within the other.
Accounting Ratio: It means ratio calculated on the basis of accounting information.
Ratio analysis: A ratio analysis is a quantitative analysis of information contained in a company's financial statements. Ratio analysis is used to evaluate various aspects of a company's operating and financial performance such as its efficiency, liquidity, profitability and solvency.
Ratios are categorized into following basic categories:
1. Liquidity Ratios
2. Solvency Ratios
3. Activity or Turnover Ratios
4. Profitability Ratios
Introduction to ratio analysis. This slide show is an analysis of accounting ratios to introduce students and those interested in taking accounting as their future career into ratio analysis. It's been simplified and made concise. The writer is a lecturer in engineering and a financial engineer. You can always follow the writer on LinkedIn, Twitter of Facebook. You comments are also welcome for future work.
This power point presentation related to process costing. which is useful to students who studying B.com, BBA,M.COM MBA etc.
It involves short notes on definition of process costing,its features,applications,difference between process costing and job costing, advantages and disadvantageous of process costing, procedure of process costing,format of process account, process losses and abnormal gain.
Financial Analysis tool containing all four types of ratios (liquidity ratio, capital structure or leverage ratio, turnover or activity ratio and profitability ratio)
Marginal costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
Cost Volume Profit (CVP).
Introduction
Fixed costs
Variable costs
Semi variable costs
Contribution margin
Break even point
PV Ratio
BEP ANalysis.
break even point
Cost-volume-Profit.
Ratio: It is the quantitative relation between two amounts showing the number of times one value contains or is contained within the other.
Accounting Ratio: It means ratio calculated on the basis of accounting information.
Ratio analysis: A ratio analysis is a quantitative analysis of information contained in a company's financial statements. Ratio analysis is used to evaluate various aspects of a company's operating and financial performance such as its efficiency, liquidity, profitability and solvency.
Ratios are categorized into following basic categories:
1. Liquidity Ratios
2. Solvency Ratios
3. Activity or Turnover Ratios
4. Profitability Ratios
Introduction to ratio analysis. This slide show is an analysis of accounting ratios to introduce students and those interested in taking accounting as their future career into ratio analysis. It's been simplified and made concise. The writer is a lecturer in engineering and a financial engineer. You can always follow the writer on LinkedIn, Twitter of Facebook. You comments are also welcome for future work.
This power point presentation related to process costing. which is useful to students who studying B.com, BBA,M.COM MBA etc.
It involves short notes on definition of process costing,its features,applications,difference between process costing and job costing, advantages and disadvantageous of process costing, procedure of process costing,format of process account, process losses and abnormal gain.
Financial Analysis tool containing all four types of ratios (liquidity ratio, capital structure or leverage ratio, turnover or activity ratio and profitability ratio)
It is an analysis of strength and weakness of an organisation by establishing the quantitative relation among the items of Balance Sheet or Income Statement of such an organisation
Ratio Analysis in financial statements (KK MAHESH PU COLLEGE)Nikhil Priya
There are many standard ratios used to evaluate the overall financial condition of an enterprise. These ratios maybe used by managers within a firm, by current and potential shareholders and by a firm's creditors. Financial analyst use financial ratios to compare the strengths and weaknesses in various companies.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
2. Meaning of Ratio
A ratio is a simple arithmetical expression of
the relationship of one number to another.
Also it can be expressed as ;
ratio is one number expressed in terms of
another and can be worked out by dividing
one number into the another.
3. RATIO ANALYSIS
Ratio analysis is a
technique of analysis
and interpretation of
financial statements
for helping in
decision making.
5. USES OR SIGNIFICANCE
• Managerial uses
- help in decision making
- financial forecasting and planning
- help in coordination
- help in control
• Utility to shareholder
• Utility to creditors
• Utility to employees
6. LIMITATION
• Limited use of single ratio
• Lack of adequate standard
• Change of accounting procedure
• Personal bias
• Uncomparable
8. LIQUIDITY
RATIOS
SOLVENCY
RATIOS
ACTIVITY RATIOS PROFITABILITY
RATIOS
CURRENT
RATIO
DEBT-EQUITY
RATIO
INVENTORY
TURNOVER RATIO
(A)IN
RELATION TO
SALES
(B)IN RELATION TO
INVESTMENT
LIQUID
RATIO
DEBT TO TOTAL
CAPITAL RATIO
DEBTORS TURNOVER
RATIO
GROSS PROFIT
RATIO
RETURN ON
INVESTMENT
CASH RATIO INTEREST
COVERAGE
CREDITORS
TURNOVER RATIO
OPERATING
RATIO
RETURN ON
CAPITAL
CASH FLOW FIXED ASSET
TURNOVER RATIO
OPERATING
PROFIT RATIO
RETURN ON EQUITY
CAPITAL
CAPITAL GEARING TOTAL ASSET
TURNOVER RATIO
NET PROFIT
RATIO
RETURN ON TOTAL
RESOURCES
WORKING CAPITAL
TURNOVER RATIO
EXPENSE RATIO EARNING PRICE
RATIO
CAPITAL EMPLOYED
TURNOVER RATIO
PRICE EARNING
RATIO
9. (1.) LIQUIDITY RATIOS
Liquidity refers to the ability of the concern to
meet its current obligation as and when
these become due.
To measure the liquidity of the firm following
ratios are calculated:
Current ratio
Quick or acid test or liquidity ratio
Cash ratio
11. b) QUICK /ACID
TEST/LIQUID RATIO
It is more rigorous test of liquidity than the
current ratio. It is the relationship between
liquid asset and quick asset and current
liabilities.
QUICK RATIO = LIQUID ASSET
CURRENT LIABILITIES
Rule of thumb 1:1
12. c) CASH RATIO OR ABSOLUTE
LIQUID RATIO
CASH RATIO = ABSOLUTE LIQUID ASSET
CURRENT LIABILITIES
13. (2.) EFFICIENCY/ACTIVITY/ASSET
MANAGEMENT RATIO
These ratio is calculated to measure the efficiency
with which the resources of the firm have been
employed. These ratio are also called turnover ratio
because they indicate the speed with which asset
are being turn over into sales. Following are the
ratios covered under this :
STOCK TURNOVER RATIO
DEBTORS TURNOVER RATIO
CREDITORS TURNOVER RATIO
WORKING CAPITAL TURNOVER RATIO
14. a) INVENTORY/STOCK
TURNOVER RATIO
It indicates the number of times the stock has
been turned over during the period and
evaluates the efficiency with which the firm is
able to manage its inventory.
INVENTORY TURNOVER = COST OF GOOD SOLD
RATIO AVERAGE INVENTORY
-INVENTORY CONVERSION=DAYS IN A YEAR
PERIOD INVENTORY T/O RATIO
15. b) DEBTORS TURNOVER
RATIO
Trade debtors are expected to be converted into cash
within a short period and are included in current
asset . hence the liquidity position of a concern to
pay its short term obligation in time depends upon
the quality of its trade debtors.
DEBTORS TUROVER =NET CREDIT ANNUAL SALES
RATIO AVERAGE TRADE DEBTORS
AVERAGE COLLECTION=NO.OF WORKING DAYS
PERIOD DEBTORS TURNOVER RATIO
16. c) CREDITORS TURNOVER
RATIO
The ratio indicates the velocity with which the
creditors are turned over in relation to
purchases.
CREDITORS = NET CREDIT ANNUAL PURCHASES
TURNOVER AVERAGE TRADE CREDITORS
RATIO
AVERAGE PAYMENT =NO. OF WORKING DAYS
PERIOD CREDITORS T/O RATIO
17. d) WORKING CAPITAL
TURNOVER RATIO
It indicates the velocity of the utilisation of the
net working capital and the efficiency with
which working capital is being used by a firm.
WORKING CAPITAL = COST OF SALES
TURNOVER RATIO AVERAGE WORKING CAPITAL
18. (3.) SOLVENCY RATIOS
Solvency refers to the ability of the concern to
meet its long term obligation. Long term
solvency ratios indicate the firm ability to
meet the fixed interest and cost and
repayment schedule associated with its long
term borrowing.
19. It is calculated to measure the relative claims of
outsiders and owners against firms asset.
DEBT-EQUITY = OUTSIDERS FUNDS
RATIO SHAREHOLDERS FUNDS
a) DEBT-EQUITY RATIO
20. b) FUNDED DEBT TO TOTAL
CAPITALISATION RATIO
It establishes a link between the long term fund
raised from outsider and total long term funds
available in the business.
FUNDED DEBT TO = FUNDED DEBT X 100
TOTAL TOTAL CAPITALISATION
CAPITALISATION
RATIO
21. c) PROPRIETORY OR EQUITY
RATIO
This ratio establishes the relationship between
shareholder funds to total asset of the firm.
PROPRIETORY = SHAREHOLDERS FUND
RATIO TOTAL ASSETS
22. d) SOLVENCY RATIO
It is a small variant of equity ratio and can be
calculated as 100 – equity ratio. It indicates
the relationship between total liabilities to
outsiders to total asset of the firm.
SOLVENCY = TOTAL LIABILITIES TO OUTSIDERS
RATIO TOTAL ASSET
23. e) FIXED ASSET TO NET
WORTH RATIO
FIXED ASSET TO = FIXED ASSET(after dep.)
NET WORTH RATIO SHAREHOLDER FUNDS
f) FIXED ASSET RATIO
FIXED ASSET = FIXED ASSET(after dep.)
RATIO TOTAL LONG TERM FUNDS
24. g) CURRENT ASSET TO
PROPRIETOR RATIO
CURRENT ASSET TO = CURRENT ASSET X 100
PROPRIETOR RATIO SHAREHOLDER FUND
25. h) DEBT SERVICE OR
INTEREST COVERAGE RATIO
INTEREST COVERAGE = EBIT
RATIO FIXED INTEREST CHARGES
26. (4.) PROFITABILITY RATIOS
(4.1. General)
a) GROSS PROFIT = GROSS PROFIT X 100
RATIO NET SALES
b) NET PROFIT = NET PROFIT AFTER TAX X 100
RATIO NET SALES
27. c) OPERATING = OPERATING COST X 100
RATIO NET SALES
d) OPERATING PROFIT =OPERATING PROFIT x100
RATIO NET SALES
28. e) CASH PROFIT = CASH PROFIT X 100
RATIO NET SALES
Where cash profit = net profit + dep.
f) EXPENSE =PARTICULAR EXPENSE X 100
RATIO NET SALES
29. (4.2.) FOR INVESTMENT
ANALYSIS
a) RETURN ON SHAREHOLDER
INVESTMENT/NET WORTH
RETURN ON SHAREHOLDER = EAIT
INVESTMENT SHAREHOLDER FUND
b) RETURN ON EQUITY CAPITAL
RETURN = NET PROFIT AFTER TAX-PREF. DIV.
ON EQUITY EQUITY SHARE CAPITAL(paid up)
30. c) EARNING PER SHARE
EPS = NET PROFIT AFTER TAX – PREF. DIV.
NO. OF EQUITY SHARES
31. (5.) MARKET TEST RATIO OR
VALUATION RATIOS
• DIVIDEND YIELD RATIO= DIV PER EQ.SH.
MARKET VALUE PER SH.
• DIVIDEND PAY-OUT RATIO= DIV. PER EQ. SH.
EPS
• PRICE EARNING RATIO= MARKET PRICE PER EQ.SH.
EPS
• EARNING YIELD RATIO= EPS X 100
MARKET PRICE PER SHARE
32. (6.) LEVERAGES RATIO
• CAPITAL GEARING RATIO
= EQ. SH. CAPITAL+ RESERVES & SURPLUS
PREF CAP + LONG TERM DEBT (bearing fixed interest)
• FINANCIAL LEVERAGE
= EBIT
EARNING BEFORE INTEREST AND TAX AND PREF DIV