Ama Insipi

Summary of ratios

Profitability
1. Gross profit: sales
Gross profit
×100
sales
2. Net profit ratio
Net profit after tax
×100
sales
3. Operating profit
operating profit
×100
sales
4. Return on capital employed
Return on capital employed
×100
Capital employed
Capital employed is the sum share capital reserve and net profit

Solvency
1. Current ratio
current assets
current liabilities
2. Acid test ratio

[ ( current assets )−stock ]

current liabilities

Efficiency
1. Asset turn over
sales
total assets
2. Stock turnover
cost of goods sold
average stock
3. Debtor days
Ama Insipi

average debtor
× 365
sales

4. Creditor days
average creditors
× 365
purchases

Shareholder ratios
1. Dividend yield
dividend per share
market price per share
2. Earnings per share
net profit∨loss avaliable for equity shares
number of equity shares
3. Dividend cover
net profit∨loss avaliable for equity shares
net dividend of share equity
4. Price/earnings ratio
market price per share
earnings per share

Capital structure
1. Net worth: Total assets
capital employed
total assets
2. Debt: Equity ratio
debt
equity
3. Capital gearing ratio
prior charge capital
total capital
Prior capital is preferential debentures and long-term loans
4. Interest cover
profit before interest ∧tax
interest charges
Ama Insipi