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Ratio Current Ratio

Formula Current Assets Current Liabilities

Numerator Inventories/Stocks (+)Debtors/B/R (+)Cash& Bank (+)Receivables/ Accruals (+)Short Term loans (+)Mktable Investment/ Short Term Securities Current Assets (-)Inventories (-)Prepaid Expenses Cash in Hand (+)Balance at Bank(Dr) (+)Mktable Investment/ Short Term Securities

Quick Ratio/Liquid Ratio/Acid Test Ratio Absolute Cash Ratio

Quick Assets Quick Liabilities

Denominator Sundry Creditors (+)O/S Exp (+)hort term loans &advances (+)BankOD/ CashCredit (+)Provi.for Tax (+)Proposed Dividend (+)Unclaimed Dividend Current Liabilities (-)Bank OD (-)Cash Credit Sundry Creditors (+)O/S Exp (+)short term loans &advances (+)Bank OD/Cas Credit (+)Provi.for Tax (+)Proposed Dividend (+)Unclaimed Dividend (Annual Cash Expenses/365) Cash Expenses=Total ExpDepre &write -offs

(Cash Marketable Securities) Current Liabilities

Basic Quick Assets Current Assets Defence Cash Expense Per Day (-)Inventories Interval (-)Prepaid Expenses Measure(in days) Notes:The first 3 ratios are expressed in times eg.1.33 times,2.85 timesor as ratio ie 1.33:1The last ratio is expressed in Days NOTE:For the capital structureratios,the following terms are used with respective meanings assigned(a) Debt=Long Term Borrowed Funds=Debenture+Long Trem Loans from Financial institutions (b) Equity =Owners Funds=Equity Capital+Preference capital+Reserves & surplus Less:Accumulated Losses. (c) Equity shareholders Funds=Equity Less Preference Share capital = Equity share Capital + Reserves & surplus Less:Accumulated Losses (d) Total Debt= Debt+ Equity=(a)+(b) above.This is called Liability Route Computation = Fixed Assets +Net WC. This is called Asset Route Computation Ratio Debt to Total Funds Ratio Equity to Total Funds Ratio Debt- Equity Ratio Formula Debt Total Funds Equity Total Funds Debt Equity Numerator See (a) above See (b) above See (a) above Denominator See (d) above See (d) above See (b) above

1 2 3

Capital Gearing ratio Proprietary ratio

Fixed Charge Bearing Capital Equity Shareholders Fund Proprietary Funds Total Asset

Preference Share capital + See (c) above Debt as per (a) above See (b) above Net Fixed Assets+Total Current Assets(only Tangible assets will be included) See (d) above

Fixed Asset to Long Term fund ratio

Fixed Asset Long term Funds

Net Fixed Assets,ie,Gross Block (-)Depreciation

Ratio Debt service Coverage Ratio

Formula Earnings for Debt Services (interest+instalment)

Numerator N/P after Taxation (+)Interest on Debt Funds (+)Non-Cash Operating Expenses (eg:Depreciation & amortizations) (+)Non-Cash Operating Adjustments (eg: Loss on sale of Fixed Assets) EBIT

Denominator Interest on Debt (+)Instalment of Debt?Loan(ie,Principal amount repaid)

Interest Coverage Ratio Preference Dividend Coverage Ratio

EBIT Interest

Interest on Debt

EAT Preference Dividend

EAT

Dividend on Preference Capital

Ratio Raw Material Turnover Ratio

Formula Cost of Material consumed Average stock of RM

Numerator Opening stock of RM (+)Purchase (-)Closing stock of RM Material consumed (+)Wages (+)Production OH

Denominator (opening stock+closing stock) 2

WIP Turnover Ratio

Factory Cost Average stock of WIP

(Opening WIP+closing WIP) 2

Finished Goods /Stock Turnover Ratio

Cost of goods sold Average stock

For Manufactures Opening stock of FG (+)(+)Purchase (-)Closing stock of FG For Traders (+)Purchase (-)Closing stock of FG

(opening stock+closing stock) 2 Or (Max stock+Min.Stock) 2

Debtors Credit Sales Credit Sales net of Turnover Average Accounts returns Ratio Receivable 5 Creditors Credit Purchases Credit Purchases net Turnover Average Accounts Payable of returns ,if any Ratio 6 Working Turnover Capital Net Working Capital Sales net of returns Turnover Ratio 7 Fixed Assets Turnover Turnover Net Fixed assets Sales net of returns Ratio 8 Capital Turnover Turnover Capital Employed Sales net of returns Ratio Note:1 Assets Route: Fixed assets+ Net Working Capital

AccountsReceivable=Debtors+B/R Average Accounts Receivable=(opg.bal+Clg.Bal)/2 Account Payable=Creditors+B/P Average Accounts Payable=(opg.bal+Clg.Bal)/2 Current assets Less:Current Liabilities

Net Fixed assets Capital Employed can be computed using (a)Assets Route or(b)Liability Route(note 1)

Liability Route: Equity share capital+Pref. share capital+Reserves & surplus+Long term Debt Less:Accumulated losses Less Non Trade investment Note:2.T/O ratios can also be expressed in terms of days as 365 / T/O ratio. Eg:No.of days Average stock is held =365/stock turnover ratio Ratio 1 Return on Investment(ROI) Or Return On Capital Employed(ROCE) 2 Return On Equity(ROE) Or Return on Net Worth(RONW) 3 Return On Assets(ROA) Formula Total Earnings Capital Employed Numerator Earnings After Tax (+)Int.on Debt Funds (+)Non-operating adjts(eg:other income/Loss on sale of Fixed assets etc) Earnings After Taxation Denominator Capital Employed can be computed by using (a) Assets Route or(b)Liability Route(note 1 under Turnover Ratio) Net Fixed Assets (+)Net WC (-)External Liabilities(Long Term) Average Total Assets or Tangible Assets or FA , ie,1/2 of Openg&Clg Bal

Equity Earnings Shareholders Funds

N/P after Taxes Average Total Assets

Earnings After Taxation

4 Earnings Per Share(EPS) 5 Dividend Per Share(DPS) 6 Price Earnings Ratio(PE ratio)

(EAT-Pref.Dividend) Number of Equity Shares Total Equity Dividend Number of Equity Shares Market Price per share Earnings Per Share

Residual earnings ie, EAT (-)Preference Dividend Profits Distributed to Equity Shareholders. Average Mkt Price (closing Mkt price) as per Stock Exchange quotations. Dividend

No.of Equity Shares outstanding=Equity Capital Face value per share As per (4)above EPS as calculated in (4)above

7 Dividend yield(%)

Dividend Avg or Clg Market Price Net Worth Number of Equity Shares Market Price per share Book value per Share

Average or closing Mkt price as per Stock Exchange quotations. As per (4)above

8 Book Value per Share 9 Market Value to book Value

As calculated in (2)above Average or closing Mkt price as per Stock Exchange quotations.

Ratio as calculated in (8)above