Contact me at gobishg gmail com Also view my blogs on www dotgiri com SL No Description A LIQUIDITY RATIOS 1 Current Ratio 2 Quick Ratio or Aci by iyn72736

VIEWS: 98 PAGES: 11

More Info
									Contact me at           gobishg@gmail.com
Also view my blogs on   www.dotgiri.com
SL No                       Description
A       LIQUIDITY RATIOS
    1   Current Ratio
    2   Quick Ratio or Acid test Ratio
    3   Absolute Cash Ratio
    4   Interval Measure

B       CAPITAL STRUCTRE RATIOS
    1   Equity to Total Funds Ratios
    2   Debt Equity Ratio
    3   Capital Gearing Ratio
    4   Fixed Asset to Long Term Fund Ratio
    5   Proprietary Ratios

C     COVERAGE RATIOS
    1 Debt Service Coverage Ratio
    2 Interest Coverage Ratio
    3 Preference Dividend Coverage Ratio

D       TURNOVER RATIOS
    1   Capital Turnover Ratio
    2   Fixed Asset Turnover Ratio
    3   Working Capital Turnover Ratio
    4   Finished Goods or Stock Turnover ratio
    5   WIP Turnover Ratio
    6   Debtors Turnover ratio
    7   Creditors Turnover ratio

E       PROFITABILITY RATOS BASED ON SALES
    1   Gross Profit ratio
    2   Operating profit Ratio
    3   Net profit Ratio
    4   Contribution Sales Ratio

F       PROFITABILITY RATOS OWNERS VIEW POINT
        Return on investment (ROI) or return on capital
    1   employed
    2   Return on Equity
    3   Earnings Per Share
    4   Dividend Per Share
    5   Return On Assets
                             Link

Current_Ratio
Quick_Ratio_or__Acid_test_Ratio
Absolute_Cash_Ratio
Interval_Measure


Equity_to_Total_Funds_Ratios
Debt_Equity_Ratio
Capital_Gearing_Ratio
Fixed_Asset_to_Long_Term_Fund_Ratio
Proprietary_Ratios


Debt_Service_Coverage_Ratio
Interest_Coverage_Ratio
Preference_Dividend_Coverage_Ratio


Capital_Turnover_Ratio
Fixed_Asset_Turnover_Ratio
Working_Capital_Turnover_Ratio
Finished_Goods_or_Stock_Turnover_ratio
WIP_Turnover_Ratio
Debtors_Turnover_ratio
Creditors_Turnover_ratio


Gross_Profit_ratio
Operating_profit_Ratio
Net_profit_Ratio
Contribution_Sales_Ratio



Return_on_investment__ROI__or_return_on_capital_employed
Return_on_Equity
Earnings_Per_Share
Dividend_Per_Share
Return_On_Assets
                                                                                          A. LIQUIDITY RATIOS - SHORT TERM SOLV

No Ratio                     Formula                                Numerator
                                                                    Inventories
                                                                    + Debtors
                                                                    +Cash & Bank
                                         Current Assets
 1      Current Ratio                                               +Receivables/Accruals
                                        Current Liabilities
                                                                    +Short term Loans
                                                                    +Marketable Investments



                                                                    Current Assets
        Quick Ratio or                    Quick Assets
 2                                                                  Less: Inventories
        Acid test Ratio                  Quick Liabilities
                                                                    Less Prepaid Expenses



                                                                    Cash In Hand
                                (Cash + Marketable securuties)      +Balance at Bank
 3   Absolute Cash Ratio
                                      Current Liabilities           +Marketable securuties & short Term
                                                                    investments



                                                                    Current Assets
                                       Quick Assets
 4     Interval Measure                                             Less: Inventories
                                   Cash Expenses per Day
                                                                    Less Prepaid Expenses


                                                              B. CAPITAL STRUCTRE RATIOS-INDICATOR OF FINANCING TECHNIQU

No Ratio                     Formula                                Numerator

                                                                    Equity Share Capital
     Equity to Total Funds             Share Holders Fund           +Preference Share Capital
 1
             Ratios                       Total Funds               +Reserves and Surplus
                                                                    Less Accumulated Losses


                                                                          Long term borrowed funds, ie
                                              Debt
 2    Debt Equity Ratio                                                  Debentures,Long term loans from
                                              Equity
                                                                                   institutions


                                                                    Preference Share Capital
                                 Fixed Charge Bearing Capital       +Debentures
 3   Capital Gearing Ratio
                                  Equity share holders Funds        + Long Term Loans



                                                                    Net Fixed Assets ie
     Fixed Asset to Long                  Fixed Assets
 4                                                                  Gross Block
      Term Fund Ratio                   Long Term Funds
                                                                    Less Depreciation
                                                                   Equity Share Capital
                                          Proprietary Funds        + Preference Share Capital
 5     Proprietary Ratios
                                            Total Assets           +Reserves & Surplus
                                                                   Less Accumulated Reserves

                                                                                 C. COVERAGE RATIOS - ABILITY TO SERVE FIXED

No Ratio                       Formula                             Numerator
                                                                   Net Profit after Taxation
                                                                   + Taxation
     Debt Service Coverage          Earnings for Debt service
 1                                                                 + Interest on Debt Funds
             Ratio                   (Interest + Instalment)
                                                                   + Non Cash Operating expense
                                                                   + Non Operating Adjustments

                                                                   Sales
                                                                   Less variable cost
                                  Earnings before Interest & Tax
 2   Interest Coverage Ratio                                       Less Fixed Cost(excluding Int)
                                             Interest
                                                                   or
                                                                   EAT+Tax+ Interest

      Preference Dividend                 Earnings after Tax
 3                                                                                       EAT
        Coverage Ratio                   Preference Dividend

                                                                                         D. TURNOVER / ACTIVITY / PERFORMANCE R

No Ratio                       Formula                             Numerator


                                                Sales
 1   Capital Turnover Ratio                                                    Sales net of returns
                                          Capital Employed




      Fixed Asset Turnover                    Turnover
 2                                                                             Sales Net of returns
             Ratio                          Fixed Assets

        Working Capital                       Turnover
 3                                                                             Sales Net of returns
        Turnover Ratio                   Net Working Capital

                                                                   For Manufacturers
                                                                   Opening Stock
                                                                   +Cost fo production
                                                                   less Closing stock
       Finished Goods or                 Cost of Goods Sold
 4
      Stock Turnover ratio                 Average Stock
                                                                   For Traders
                                                                   Opening Stock
                                                                   + Purchases
                                                                   Less Closing stock

                                            Factory Cost
 5    WIP Turnover Ratio                                           Materials +wages+Production OH
                                         Average stock o WIP
                                           Credit Sales
 6   Debtors Turnover ratio                                       Credit Sales net of returns
                                    Average Accounts receivable




                                         Credit Purchases
 7   Creditors Turnover ratio                                     Credit Purchases Net of returns if any
                                     Average Accounts payable


                                                                                            E. PROFITABILITY RATOS BASED ON SA

No Ratio                        Formula                           Numerator

                                             Gross profit
 1      Gross Profit ratio                                             Gross profit As per trading Account
                                               Sales

                                                                  Sales Less Cost of sales
                                                                  or
                                           Operating profit
 2    Operating profit Ratio                                      Net profit
                                               Sales
                                                                  Add Non operating expenses
                                                                  Less Non operating Incomes

                                              Net profit
 3       Net profit Ratio                                         Net profit
                                               Sales

       Contribution Sales                    Contribution
 4                                                                Sales less Variable costs
             Ratio                             Sales

                                                                                          F. PROFITABILITY RATOS OWNERS VIEW P

No Ratio                        Formula                           Numerator




                                                                               Profit After Taxes
                                                                                 Add : Taxation
     Return on investment
                                          Total Earnings                          Add : Interest
 1   (ROI) or return on
                                      Total capital Employed              Add: Non Trading Expenses
     capital employed
                                                                        Add: Non Operating incomes like
                                                                          rents,interest and dividends




                                          Earnings After Tax
 2      Return on Equity                                                          Profit After Taxes
                                              Net Worth


                                     (PAT-Preference Dividend)                     Profit After Taxes
 3     Earnings Per Share
                                      Number of Equity Shares                  Less Preference Dividend
                             Dividend
4   Dividend Per Share                                Profit distributed to equity share holders
                         Number of Equity Shares


                             Net Profit after Taxes
5   Return On Assets                                           Net Profit After Taxes
                             Average Total Assets
DITY RATIOS - SHORT TERM SOLVENCY

           Denominator                                                                    Significance

           Sundry Creditors (For Goods)
           +Outstanding Expenses
           +Short Term Loans & advances                      Ability to repay short term commitmnets prompltly. Ideal ratio is
           +Bank Overdraft/ Cash Credit                      2:1.High ratio indicates existence of idle current assets
           +Provisio for Taxation
           +Proposed or Unclaimed Dividend


           Current Liabilities
           Less : Bank Overdraft                             Ability to meet immediate liabilities.Ideal ratio is 1.33:1
           Less Cash Credit

           Sundry Creditors (For Goods)
           +Outstanding Expenses
           +Short Term Loans & advances
                                                             Availibility of cash to meet short term commitments
           +Bank Overdraft/ Cash Credit
           +Provisio for Taxation
           +Proposed or Unclaimed Dividend

                       Annual Cash Expenses
                                 365
                                                             Ability to meet regular cash expenses
            Cash expenses=Total expenses Less Depreciaton
                           and write offs

DICATOR OF FINANCING TECHNIQUES AND LONG TERM SOLVENCY

           Denominator                                                                    Significance


               Total Long term Funds employed in business    Indicates long term solvency; mode of financing; extend of own
                              =Debts+Equity                  funds used in operations


           Equity Share Capital
           + Preference Share Capital
                                                             Indicates relationship between debt & Equity, Ideal ratio is 2:1
           +Reserves and Surplus
           Less Accumulated losses if any

           Equity Share Capital
                                                             Shows Proportion of fixed charge (dividend or interest) bearing
           + Reserves and Surplus
                                                             capital to equity funds, the extend of advantage or leverage
           Less Accumulated Losses if any
                                                             enjoyed by equity share holders


           Share Holders Fund                                shows proprtion of Fixed Assets finanaced by by long term funds.
           + Debt Funds (Numerator 1+Numerator 2 as in 1 &   Indicats    the    financing    approach      followd      by    the
           20                                                firm.conservative,matching or aggressive; idea ratio is less than 1
            Net Fixed Assets
            + Total Current Assets                            Shows extend of owners fund utilised in financing assets
            (Only tangiable Assets will be included)


RATIOS - ABILITY TO SERVE FIXED LIABILITIES

            Denominator                                                                   Significance

            Interest on Debt                                  Indicates extend of current earnings available for meeting
            + Instalment of Debt                              commitments and outflow towards interest and instalments; Ideal
            (Principal Repaid)                                ratio must be between 2 to 3 times




                                                                Indicates ability to meet interest obligations of the current year.
                            Interest on debt Fund
                                                                                Should be generally greater than 1




                    Dividend on Preference Share Capital         Indicates ability to pay dividend on preference share capital


VER / ACTIVITY / PERFORMANCE RATIOS

            Denominator                                                                   Significance
            Equity share Capital
            + Preference Share Capital
            +Reserves & Surplus                                Ability to generate sales per rupee of long term investment. The
            + Debentures                                                      higher the turnover ratio the better is
            + Long Term Loans
            Less Accumulated Losses


                              Net Fixed Assets                         Ability to generate sales per rupee of Fixed Asset


                    Current Assets Less Current liabilities           Ability to generate sales per rupee of Fixed Assets




                       Opening Stock +Closing Stock
                                    2                                     Indicates how fast inventory is used / Sold
                                                                A higher turnover ratio generally indicates fast moving material
                      Maximum Stock + Minimum Stock                   while low ratio may mean dead or excessive stock.
                                    2




                         Opening WIP+Closing WIP
                                                                       Indicates the WIP movement /Produaction cycle.
                                    2
                           AR= Debtors+ BR
                              Average AR=
                                                                            Indicates speed of collection of credit sales
                         Opening Bal+Closing Bal
                                   2

                           AP= Creditors+ BP
                              Average AP=
                                                                                 Indicates Velocity of debt payment
                         Opening Bal+Closing Bal
                                   2

OFITABILITY RATOS BASED ON SALES

           Denominator                                                                      Significance


           sales net of returns                                                     Indicator of basic profitability




           sales net of returns                                           Indicator of Operating performance of businesss




           sales net of returns                                                    Indicator of overall profitabillity


           sales net of returns                                              Indicator of profitability in marginal costing


 TABILITY RATOS OWNERS VIEW POINT

           Denominator                                                                      Significance

           Asset Route:
           Net fixed assets (Including intangiable assets like
           patents,but not fictitiious assets miscellaneous
           expenditure not w/off)
           +Net Working Capital                                     Overall profitability of the business for the capital employed;
           Liability Route                                               indicates the return on the total capital employed.
           Equity Share Capital                                  Comparison of ROCE with rate of interest of debt leads to financial
           +Prefence share capital                                 leverage. If ROCE> Interest rate, use of debt funds is justified
           +reserves & Surplus
           +Debentures and long term Loans
           Less Accumulated Losses
           Less Non trade Investments

           Net Fixed Assets
           +Net working Capital                                         Profitability of Equity funds invested in the business
           Less External Liabilites(Long Term)

                  Number of Equity shares Outstanding=
                                                                     Return or income per share, whether or not distributed as
                         Equity Share Capital
                                                                                            dividends
                         Face value per share
Number of Equity shares Outstanding=
       Equity Share Capital             Amounts of dividend distributed per share
       Face value per share


 1/2 of Opening and Closing Balance    Net Income per rupee of average fixed assets

								
To top