Professional Documents
Culture Documents
Profitability Ratios
Related to Sales
Related to Investments
P & L A/c
Contd..
(III) Operating Ratio: Operating Costs * 100 Net Sales where operating costs = Cost of goods sold + Operating expenses Operating Expenses are : Administrative and office expenses + Selling and distribution expenses Interpretation IV) Expenses ratio: Expenses *100 Net sales
P & L A/c
Interpretation
Earnings per share =Net profit after tax&Preference Dividend Number of Equity Shares
Interpretation
Debt Equity ratio = Debt Equity shareholders funds Debt : All external long term liabilities Equity shareholders funds: Share Capital + Reserves and Surplus- Accumulated Losses
Interest Coverage ratio = Net profit (before interest and tax) Interest
DSCR = PAT + Depreciation + other non cash expenses +Interest on term loan Interest on Term loan + Term loan Installments
VALUATION RATIOS
Price-Earning Ratio = Market Price of the share Earnings Per Share Dividend payout ratio = Dividend per share * 100 Earning per share
Numericals
99,900 By Gross Profit b/d By Profit on sale of shares By interest on investments 34,000 600 300 34,900
Ratio
Ratio
24