Scribd Logo
Upload

Welcome to Scribd!

  • 0 views

    Ratio Analysis

    Uploaded by

    vishalvishu6248

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Ratio Analysis

    Uploaded by

    vishalvishu6248
    0 views2 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    0 views2 pages

    Ratio Analysis

    Uploaded by

    vishalvishu6248

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    Ratio Analysis

    Ratio Analysis
    An analysis is maid using the current year data numbers to estimate the future . it is a fundamental
    analysis made to know the financial figures.

    Liquidity ratio's
    Current Ratio
    It is used to calculate to know weather current current assets are enough to pay the current debts .
    The ideal ratio is 1:1 . it can be calculated as follows:
    Current Ratio = Current Assets / Current Liabilities

    The company current ratio is too low, the following actions can be taken
     Paying some of the debts
     Rising some funds or loans which is less than a year
     Rising new requites to increase your current assets
     Maintain some reserve from profits to meet the current transactions
    Acid Test Ratio:
    The ratio explains about the shot terms liquidity. the higher quick ratio indicates that the company in
    the stable position. we can obtain the quick assets =current assets -stock. it can be explained as
    follows:
    Quick assets/ Current Liabilities

    Turnover Ratio's:
    Receivables Turnover ratio explains about how the Receivables are collected on an average days .It
    can be calculated as follows:
    Net Credit Sales / Debtors Or Avg Accounts Receivables.

    Inventory Turnover ratio's


    To know the avg inventory level.It is calculated as follows:
    COGS / Cost of Goods Sold / Avg Inventory

    To know the avg collection period


    Avg debtors / Avg Daily Credit Sales

    To know inventory period


    365/debtors Turn Over Ratio
    Fixed-Asset Turnover Ratio:
    The ratio is calculated on net sales to fixed assets. the highest ratio ensures how the management is
    using the investments in fixed assets.
    Net Sales/Net Fixed Assets

    Total Assets Turnover Ratio


    This ratio denotes the use of total assets in terms of sales. it is to know the difference between total
    assets and the fixed assets of the firm.it can be calculated as follows:
    Net Sales / Total Assets

    Leverage Ratio's:
    It measures the risk of company.generally if the company have more debt then the risk is higher
    because all the assets are to be distributed in case of company becomes bankrupt . The Ratio
    analysis is to calculate every aspect of the company

    Debt Equity Ratios:


    The Value of the organization or company is given by its debt holders when you compare with its real
    owners.
    It is calculated as follows:
    Total Debt / Total Equity

    Interest Coverage ratio:


    After taken borrowings by the company in debt , generally interest charges are applied. this ratio is
    measured the ability that the interest is payable or not with income earned by the company it is
    measures as follows:
    It is calculated as follows:
    Earnings before tax and interest /interest
    The Debt Service Coverage Ratio (DSCR):
    The debt service coverage ratio (DSCR), also known as "debt coverage ratio. The debt service
    coverage ratio (DSCR),, also called as "debt coverage ratio," is the ratio calculated to meets the
    payments and debts with the return income.it easy to loans when this ratio is more. it can be
    calculated as follows:
    Profit After Tax+ Deprecation+ Non Cash Exp+ Interest On Term Loans /
    Interest On Term Loans + Payment On Long Term Loans

    Profitability Ratios
    Explains the profit margin,return on equity , return on assets, return on capital employed, return on
    share holders equity, Earning per share that all are the income generating by the company :
     Gross profit ratio= gross profit / Net sales * 100
     Net profit ratio= Net profit / Net sales * 100
     Return on total assets= profit before int & tax / Fixed assets + current assets
     Return on capital employed = Net profit after tax / Total Capital Employed
     Return on share holders equity= Net profit after tax / avg total share holder equity or
    Net worth
     Earning per share= Net profit available to share holders / No.Of shares outstanding
     PE ratio = Market price per share / EPS ( earnings per share).

    You might also like