Profitability ratios
Gross profit ratio
Net profit ratio
Operating profit ratio
Operating ratio
Factory expenses ratio
Selling expenses ratio
Administrative expenses
ratio
Particular expenses ratio
Return on investment
Return on shareholders
funds
Return on equity
Return on capital employed
Return on total assets
Earnings per share
Price earning ratio
Payout ratio
Dividend per share
Retained earnings ratio
Dividend yield ratio
Capital turnover ratio
Fixed assets turnover ratio
Working capital turnover
ratio
Stock turnover ratio
Debtors turnover ratio
(Gross profit / Net sales) x100
(Net profit / Net sales) x100
(Operating profit / Net sales) x100
Or
Operating profit ratio = 100 – Operating cost ratio
Operating Profit – Net profit + Non operating exp. – Non op.
income
Non Op. Expenses – Int. on Loan; Loss on sale of assets
Non op. Income – Dividend, Interest, Profit on sale of asset.
(Cost of goods sold + operating expenses/ Net sales) x100
Or
Operating ratio = 100 – Operating Profit ratio
Expenses ratio
(Factory expenses / Net sales) x100
(Selling expenses / Net sales) x100
(Administrative expenses/ Net sales) x100
(Particular expenses/ Net sales) x100
NPAT/Total Investment
(Net profit after Int & tax / shareholders funds) x100
NPAT/Net worth
Net profit after tax & Pref dividend / Equity share sholders funds.
(Operating profit / capital employed) x100
Capital employed = Shareholders’ funds + Long term (Non
current) liabilities
(Net profit AT / Total assets – Fictitious assets) x100
Profit available for equity shareholders (NPAT & Pref. dividend) /
No.of equity shares
Market price per share /Earning per share
Dividend per share / Earning per share
Or
Equity Dividend / NPAT & Pref. Dvidend ×100
Dividend paid to equity share holders / No.of equity shares
Retained earnings / Net profit after tax & Pref dividend
or
1-- dividend payout ratio
Dividend per share / Market price per share
Activity / turnover ratios
Cost of sales/Capital Employed
Capital employed = Shareholders’ funds + Long term (Non-
current) liabilities
Cost of sales/Net fixed assets
Cost of sales/Net working capital
Net Working capital = Current assets- Current liabiliites
Cost of goods sold / Average inventory at cost
(or)
Net Sales / Average inventory at cost
Credit sales/ average debtors
 Average debtors = (op balance of Dr. & B/R + closing balance of
Average collection period
(Average debtors x Months or days in a year) / Net Credit sales
Creditors turnover ratio
Average payment period
Current ratio (Ideal - 2:1)
Liquid ratio (Ideal – 1:1)
Or
Quick Ratio
Or
Acid test Ratio
Net working capital ratio
Cash position Ratio
(Absolute liquidity ratio)
Outsiders funds/Long term debt includes debentures, bonds, long
Debt-equity ratio (Ideal –
1:1)
Shareholders’ funds = Equity share capital + Preference share
Fixed charges/
Interest coverage ratio(ICR)
Fixed dividend coverage
ratio
Fixed assets ratio
Proprietary ratio
Tangible Assets – All assets except Goodwill & Preliminary Exp.
Ratio of fixed assets to
proprietor’s funds
Ratio of current assets to
proprietor’s funds
Ratio of current assets to
fixed assets
Reserves to capital ratio
Capital gearing ratio
Operating leverage
Financial leverage
Combined leverage
Drs. & B/R) / 2
No. of days or months in a Yr. / Debtors turnover ratio
Or
for the year
Net Credit annual purchases/ Average accounts payable
No. of days or months in a Yr. / Creditors turnover ratio
Or
Average accounts payable/average monthly credit purchases
Liquidity ratios
Current assets/current liabilities
Liquid assets/current liabilities
Liquid assets = Current assets – (Inventories & Prepaid
expenses)
Net working capital/net assets
(Cash and marketable securities)/ Current liabilities
Or
(Cash+Bank+Short term investments) /(C.L – Bank O.D)
Solvency ratios
Outsiders funds/shareholders funds
term loans and other long term borrowings.
capital + Reserves and surplus
EBIT/Fixed interest charges
Net profit after tax and dividend/ preference dividend
Net sales or cost of sales/Net Fixed assets
Net Fixed assets =Value of assets – Depreciation
Shareholders funds/ Total tangible assets
Fixed assets/ proprietor’s funds
Current assets/ proprietor’s funds
current assets / fixed assets
Reserves/equity capital
Fixed interest (& dividend) bearing funds/Equity share capital
Leverage Ratio
Contribution / EBIT
Contribution = Sales – Variable Cost
EBIT – Operating Profit i.e., Sales-V.C-F.C
EBIT / PBT
PBT – Profit before tax but after interest
Contribution / PBT
Solvency ratio Total liabilities/total assets