SUMMARY OF FINANCIAL RATIOS

TECHNIQUES/TOOLS TO MEASURE LIQUIDITY

1 WORKING CAPITAL = CA - CL

2 CURRENT RATIO = CA / CL

3 QUICK ASSET RATIO = QA / CL

4 RECEIVABLE TURNOVER = Credit Sales / AVE. A/R

5 AGE OF RECEIVABLES = 365 days / A/R T

6 INVENTORY TURNOVER = COGS / AVE. MI

7 AGE OF INVENTORY = 365 days / Inv T

8 PAYABLE TURNOVER = Net Purchases / Ave. A/P

9 AGE OF PAYABLE = 365 / Pay. T

10 Operating cycle = Inventory period + Accounts Receivable period

11 Cash cycle = Operating cycle - Accounts payable period

TECHNIQUES/TOOLS TO MEASURE SOLVENCY

 12 DEBT-EQUITY RATIO = Total Liabilities / Total Equity

13 DEBT RATIO = Total Liabilities / Total Assets

14 EQUITY RATIO = Total Equity / Total Assets

15 TIMES INTEREST

EARNED RATIO = Earnings before Int & taxes / Interest Expense

16 CASH FLOWS TO DEBT = Operating cash flows / Total Liabilities

TECHNIQUES/TOOLS TO MEASURE PROFITABILITY

17 GROSS PROFIT RATIO = GP / NS

18 RETURN ON SALES = PROFIT / NS

19 RETURN ON ASSETS = NI B4 TAX & INT / AVE TA

20 RETURN ON EQUITY = NET INCOME / AVE EQUITY

21 EARNING PER SHARE = NET INCOME / WEIGHTED AVE. SC

22 PRICE EARNING RATIO = MARKET PRICE PER SHARE / EARNING PER SHARE
23 DIVIDEND YIELD = DIV. PER SHARE / PRICE PER SHARE

24 PAYOUT RATIO = DIV. PER SHARE / EARNING PER SHARE