Ratio Analysis

Liquidity Ratios

1. Current Ratio = Current Assets / Current Liabilities

2. Liquid (Or) Acid (Or) Quick Ratio = Liquid Assets (or) Quick Assets / Current Liabilities

Solvency Ratio

1. Debt to Equity Ratio = Debt / Equity (Shareholders Fund)

2. Total Assets to Debt Ratio = Total Assets / Debt

3. Proprietor Ratio = Shareholders Fund (or) Proprietor Fund / Total Assets

4. Interest Coverage Ratio = Profit Before Interest and Tax / Interest on Long-term Debt

Activity Ratio (or) Turnover Ratio

1. Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory

Trade Receivable Turnover Ratio =

2.
Credit Revenue from Operations / Average Trade Receivables

3. Trade Payable Turnover Ratio = Net Credit Purchase / Average Trade Payables

4. Working Capital Turnover Ratio = Revenue from Operations / Working Capital

Profitability Ratio

1. Gross Profit Ratio = Gross Profit / Revenue From Operations × 100

Operating Ratio =
2.
Cost of Revenue from Operation + Operating Expenses / Revenue from Operations × 100

3. Operating Profit Ratio = Operating Profit / Revenue from Operations ×100

4. Net Profit Ratio = Net Profit after Tax / Revenue from Operations ×100

Return on Investment (or) Return on Capital Employed =

5.
Net Profit Before Tax / Capital Employed ×100