Last Minute Read - ABM - Balance Sheet management

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1. Net worth = A) Excess of assets over liabilities( for individual) B) Capital +

Reserve (for company)

2. Networking Capital = A) Total of current asset-Total of current liability B)

Difference b/w long term source and long term use

3. Debt Equity ratio (DER) = A) Term loan/Tangible networth B) Long term debt/Share
holders equity C) Total liability/Share holders equity

4. DSCR = A) Total cash flow before interest/Total repayment obligation B) ( Net

profit + Depriciation + Interest on long term liability )/ (Instalment + interest
on long term liability)

5. Return on asset = Operating profit/(Total asset-intangible asset)

6. ICR(Interest coverage ratio )= EBIT / Interest on long term borrowings Where

EBIT = Earning before interest and taxes

7.Total outside liabilities= current liability + long term liability

8. Total tangible asset = CA+ Fixed asset+ other non currrent asset

9. Tangible networth = Networth - intangible asset

10. Current Ratio = CA:CL

11. Quick Ratio = ( CA - Inventories )/ CL

12. Quick asset = CA - Inventory

13. Heads that come under current asset→

Inventory, Preliminary Expenses/prepaid expenses, Cash and bank balance, Sundry
debtors/Bill reicivables, Investment in qouted securities such as Govt sec , FDR

14. Heads that come under liabilities ->

Sundry creditors/Bills payable, Installment of term loan payable in a year,
prefrential capital, Provisions to paid in a year, WCTL( Working capital term
loan )