Financial

1) Liquidity ratios 2) Asset turnover ratios 3) Financial leverage ratios 4) Profitability ratios 5) Dividend policy ratios Liquidity ratios
Current ratio = Current assets Current liabilities Current assets - Inventory Current liabilities

Ratios

Quick ratio =

Cash ratio =

Cash + Marketable securities Current liabilities Current assets - Current liabilities Sales

Net working capital to sale ratio =

Working capital =

Current assets-Current liabilities

Assets turnover ratios

Account receivable turnover (in times) = Annual credit sales Account receivable

Average collection period =

Account receivable Annual credit sales /365

Account receivable turnover (in days) =

365 Receivable turnover

Account payable turnover (in times) = Annual credit purchases Account payable

Average payment period =

Account payable Annual credit purchases /365

Account payable turnover (in days) =

365 Payable turnover

Inventory turnover (in times) =

Cost of goods sold Average inventory

Inventory period =

Average inventory Annual C G S /365

Inventory turnover (in days) =

365 Inventory turnover

Total asset turnover =

Sales Total assets

Fixed asset turnover =

Sales Total fixed assets

Operating Cycle = (ITD+RTD) Cash convrsion cycle = (ITD+RTD)-PTD ITD = Inventory turnover in days RTD= Receivable turnover in days PTD= Payable turnover in days

Financial leverage ratios

Total capitalization ratio = Long term debt Total capitalization Total capitalization = Long term debt+Equity Debt ratio= Total liabilities Total assets

Debt-to- total assets ratio

Total debt Total assets

Long term debt ratio =

Long term debt Total assets

Debt-to-equity ratio =

Total debt Shareholders equity

Interest coverage =

Earning before interest & taxes Interest charges

Equity multiplier = Total assets Shareholder equity or 1+Debt to equity ratio

Fixed charge coverage ratio = Earning before interest & taxes + lease payment Interest+leasepayment

Profitability ratios
Gross profit margin = Sales cost of goods sold or Gross income Sales Sales

Operating profit margin = Operating Profit Sales

Net profit maegin = Or Sales profitability Return on assets or Investment or Asset earning power =

Net profit after tax Sales

Net profit after tax Total assets

Return on equity or Shareholder equity or Equity earning power =

Net profit after tax Shareholder equity

Return on capital

R O E / (1+Debt to equity ratio)

ROI = (Net Profit After Taxes Sales) x (Sales Total Assets)

ROE = (Profit margin)*(Asset turnover)*(Equity multiplier) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

Dividend policy ratios

Dividend yield = Dividend per share Share price

Dividend pay out ratio =

Dividend per share Earning per share

Earning per share =

Net income available to shareholders Numbers of shares outstanding

Dividend per share =

Dividend paid to shareholders Number of shares outstanding

Price earning ratio =

Market price per share Earning per share

Note.

Purcases= Cost of goods sold+Ending inventory-Beginning inventory