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    This document defines and explains various financial ratios used to evaluate business performance, including: 1) Profitability ratios like ROCE, ROE, Gross Profit Margin, and Net Profit Margin to measure efficiency and returns. 2) Gearing ratios like Debt to Equity to measure leverage. 3) Investment ratios like Dividend Per Share, Dividend Yield, and PE Ratio to evaluate stock investments. 4) Liquidity ratios like Current Ratio and Acid Test Ratio to assess short-term financial health. 5) Efficiency ratios like Inventory Turnover and ratios related to working capital management.

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    This document defines and explains various financial ratios used to evaluate business performance, including: 1) Profitability ratios like ROCE, ROE, Gross Profit Margin, and Net Profit Margin to measure efficiency and returns. 2) Gearing ratios like Debt to Equity to measure leverage. 3) Investment ratios like Dividend Per Share, Dividend Yield, and PE Ratio to evaluate stock investments. 4) Liquidity ratios like Current Ratio and Acid Test Ratio to assess short-term financial health. 5) Efficiency ratios like Inventory Turnover and ratios related to working capital management.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
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    3 views4 pages

    Ratios

    Uploaded by

    vishi1289
    This document defines and explains various financial ratios used to evaluate business performance, including: 1) Profitability ratios like ROCE, ROE, Gross Profit Margin, and Net Profit Margin to measure efficiency and returns. 2) Gearing ratios like Debt to Equity to measure leverage. 3) Investment ratios like Dividend Per Share, Dividend Yield, and PE Ratio to evaluate stock investments. 4) Liquidity ratios like Current Ratio and Acid Test Ratio to assess short-term financial health. 5) Efficiency ratios like Inventory Turnover and ratios related to working capital management.

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    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    profitability ratio 1 ROCE=PBIT/TA-CA ROCE=PROFIT MARGIN X ASSET TURNOVER PROFIT MARGIN=NP/SALES ASSET TURNOVER=SALES/TA-CL

    2 ROE=PAT/NO OF EQUITY SHARE HOLDERS AND RESERVES 3 GP MARGIN=GP/SALES 4 NP MARGIN=NP/SALES

    GEARING RATIO 1 DEBT TO EQUTIY RATIO=LOANS/SHARE CAPITAL+RESERVES

    INVESTMENT RATIOS 1 DIVIDEND PER SHARE=DIVIDEND/NUMBER OF SHARES 2 DIVIDEND YIELD=DPS/MARKET VALUE PER SHARE 3 DIVIDEND COVER=PAT+PREF DIVIDEND/ORDINARY DIVIDEND 4 EPS=PAT+PREF DIV/NO OF ORDINARY SHARES 5 PE RATIO=MARKET VALUE OF SHARE/EPS

    High (Low) P/E indicates a high (low) price to buy a given level of earnings This does not indicate that the share is a good / poor buy: this must be judged in relation
    6 INTEREST COVER=PBIT/INTEREST PAYABLE

    LIQUIDITY RATIO

    1 CURRENT RATIO=CA/CL 2 ACID TEST RATIO=CA-STOCK/CL

    EFFECIENCY RATIO 1 INVENTORY TURNOVER=COGS/AVG INVENTORY LEVEL 2 INVENTORY PERIOD =AVG STOCK HELD/COST OF SALES X 365

    WORKING CAPITAL CYCLE=INVENTORY TURNOVER PERIOD+DEBTOR COLLECTION PERIOD-CR COLLECTION PERIOD

    en level of earnings must be judged in relation to sector comparisons, growth prospects etc. etc

    N PERIOD-CR COLLECTION PERIOD

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