Nishi Sir's Ratios

Sr # RATIOS FORMULA EXPRESSED AS SUITABILIT Y PURPOSE Remarks Operating Effeciency of Co

1 2

Gross Profit Ratio Net Profit Ratio a) Op Net Profit Ratio

Gross Profit X 100 Net Percentage % High Ratio sales Op Net Profit Net sales
X 100

To Judge Profitability To Judge Profitability To Judge Profitability To Judge Profitability To know Op cost & Profit

Percentage % High Ratio Percentage % High Ratio

N P B T X 100 b) Net Profit Before Tax Ratio Net sales

3 4

Net c) Net Profit After N P A T X 100 Percentage % High Ratio Tax Ratio sales COS + Op Exp X 100 Op Ratio Percentage % Low Ratio Net sales Expense Ratio
Adm Exp / S&D EXP / Finc exp / Dep Exp X 100 Net sales Total Op Exp Net sales

Percentage % Low Ratio Percentage % Low Ratio Times Times Times Pure Ratio (std 2:1) Pure Ratio (std 1:1) High Ratio High Ratio High Ratio High Ratio High Ratio

To know Op cost & All Operating Profit Expenses To know Op cost & Profit To know Stock Turnover & Management To know Stock Turnover & Management To know Stock Turnover & Cost Of Production Management To know short term Solvency CA-STK-PP EXP CLTo know immediate Solvency (LiquidRatio) BankOD-C.C. To know extent of WC = CA - CL (net WC invested in stock WC) To judge Long Term Solvency & Stability of Co. To judge Long Term Solvency & Stability of Co. To judge Long Term Solvency & Stability of Co. To know overall Pfofitability Earned compared to T.F. To know overall Pfofitability Earned to T.F. % of Profit Earned on Prop Funds % of Profit Earned on Eq Sh H. Fund Collection From Debtors in Year OpDRS+cl Drs / 2 IF no op DRs given, take Cl Drs FA + CA + Invt.

X 100

5

Stock T/O Ratio (stock Velocity Ratio) a) Raw Material T/O Ratio b) Work In Progress T/O Ratio

COS

Average R M Stock
Raw Material Consumed

Average R M Stock
COP

Average W I P Stock
Current Assets Current Liabilities Quick Assets Quick Liabilities

6 7 8 9 10 11

Current Ratio Quick Ratio Stk Working Capital Ratio

Closing Stock
Working Capital

x 100

Properietory Ratio Prop's Funds x 100 Total Assets / Equity Ratio (excl Misc Exp) Debt / Equity Ratio Capital Gearing Ratio
Debt(Long Term Loans) Equity (Share Holders Funds) Funds with Fix Interest Funds with Fluctuating Int. Op Net Profit + Int. x 100 Capital Eployed. (SHF + Long Term Loans) N.P.B.T. + Interest Total Assets (Ecept Misc. Exp) (Total Resources) NPAT + Fund NPAT Sh Cap

Percentage % (std Low Ratio <100%) Percentage % (std High Ratio >50%) Pure Ratio (std <2:1) Pure Ratio (std < 1) Low Ratio Low Ratio

FixInt.=Loans+Pref Sh nonFixInt=EqSh-PrefSh

Return On 12 Inestent / Capital Employed Return On Total 13 Assets / Total Resoures 14 15 Return On Prop. Funds Return On Eq Sh. Holders Funds Debtors Turn Over Ratio

Percentage % Low Ratio Percentage % High Ratio Percentage % High Ratio Percentage % High Ratio

(Share holders Funds + LongTermLoans) Total Assets = FA+Inv+CA OR SHF + LTL+CL

Interest X 100 Pref. Dividend

Share Holders

Prop Fund - Pref

16

Net Credit Sales Average Drs & Bills Rec.

Times

High Ratio

Nishi Sir's Ratios Avg Colletion Period / Age of Drs 17 Creditors Turn Over Ratio
Avg Drs & B. R. X 365D Net Credit Sales Net Credit Purhases Average Crs & Bills Pay.

D/M Times Times Rs Times

Short Period High Ratio High Ratio High Ratio Low Ratio

Credit Period OR devide by 12 M / Allowed to Debtors 52 Weeks Payments to Creditors in Year Cr. Period Allowed OR devide by 12 M / by Creditors 52 Weeks To Know Profit & Kt Price of Shares Provide guidene for investments

Avg Payent Avg Crs & B. P. X 365D Net Credit Sales Period /Age of Crs Earning Per Share NPAT - Pref Diidend No Of equity Shares (E.P.S.) Price Earning Market Price Of shares 19 E.P.S Ratio (P.E.) 18
a) Total Dividend on & Pref Shares X 100 NPAT b) EQ Dividend Per X 100 EPS Eq

20

Dividend PayOut Ratio (D/P Ratio)

Share

% of NP distributed by way of Dividend High Ratio ~ Liberal Percentage % High Ratio Dividend Policy and Low Ratio ~ Conservative dividend Policy
it gives dividend and earning % on the MKT Price of the shares; High Ratio also represents the real dividend rate / earning rate

Yield Ratio a) Dividend Yield 21 Ratio b) Earning Yield Ratio Debt Service 22 Coverage Ratio

a) Equity Dividend Per Share X 100 MKT Price EPS

Percentage %

X 100
MKT Price

NPAT+ Dep. & other non cash EXP + Int Interest + Loan Installment p.a. NPBT + Interest Interest Sales / Net FA

> 1 or < 1

High Ratio

23 24

Interest Coverage Ratio

Times

High Ratio

To Judge the capacity of Borrower to pay int and Loan Instal To Judge Profit NPBT-TAX& int. = availabvle for NPAT + TAX Int on paying interst and Loans Installment

FA Turn Over Ratio Capital Turnover 25 Ratio Working Capital 26 TO Ratio 27 Assets T/O ratio Pref Dividend Coverage Ratio Eq Dividend 29 Coverage Ratio FA to SHFund 30 Ratio 28 31 Debt Assets Ratio 32 Return on Assets Ratio

COS

Sales / COS Capital Employed Sales / COS Working Capital Sales Average Assets NPAT (before Pref Div) Pref Dividend NPAT - Pref Div EQ Dividend Fixed Assets Share Holders Funds Debt Assets Net Profit Average Assets or Sales

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