RATIO ANALYSIS

I) Operating Efficiency Based on Profit: 1) Gross Profit Ratio: Gross Profit = Sales Cost Of Goods Sold (COGS), Sales = G/p + COGS COGS = Sales G/p COGS = Opening Stock + Purchases + Direct Expenses + Manufacturing Expenses Closing Stock 2) Operating Ratio = Operating Expenses = Administrative Exp + Selling & Dist. Exp.

3) Operating Profit Ratio =

4) Net Profit Ratio =

Sales Less: (COGS) G/P Less: (Operating Expenses) Operating Profit Less: (Non Operating Expenses) Add: Non Operating Incomes N/P Less: (Tax) PAT/EAT XXX (XXX) XXX (XXX) XXX

(XXX)

XXX XXX (XXX) XXX

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II)

Operating Efficiency Based on Investment: 1) Return on Capital Employed (ROCE)= Capital Employed = Equity Share Capital + Preference Share Capital + Undistributed Profit + Reserves & Surplus + Long Term Liabilities Fictitious Assets Non Business Assets. 2) Return on Net Worth Share holders Fund =

Share Holders Fund = Equity Share Capital + Preference Share Capital + Reserves & Surplus Fictitious Assets 3) Return on Equity Share Holders Fund:

Equity Share Holders Fund = Equity Share Capital + Capital Reserves + Revenue Reserves + Balance of Profit & Loss A/c Fictitious Assets Non Business Assets.

4) Return on Total Assets =

5) Earnings Per Share =

6) Price Earning (P/E) Ratio = 7) Net Cash Accrual = Cash Inflow Cash Outflow + Depreciation

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8) Payout Ratio = Dividend per Share = Dividend Paid in %

PAR value of a
Companys Share

9) Retained Earning Ratio =

10)

Dividend Yield Ratio =

III)

Liquidity or Short Term Solvency Ratio: 1) Current Ratio =

2)

Liquidity or Acid Test Ratio = Liquid Assets = C.A. Inventories Prepaid Expenses Current Liabilities will be taken only if there is no Bank Overdraft.

3)

Absolute Liquid or Super Quick Ratio or Cash Ratio =

IV)

Activity or Turn Over Ratio 1) Inventory or Stock Turn Over Ratio (I T R) =

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Average Stock =

2) Average/ Inventory Turn Over Ratio = 3) Debtors/Receivables Turnover Ratio (DTR) =

Average Debtors = Trade Debtors = Sundry Debtors + Bills Receivables 4) Avg. or Debtors Collection Period = 5) Creditors/Payables Turnover Ratio (CTR) =

6) Avg. or Creditors Payment Period =

7) Working Capital Turn Over Ratio = 8) Analysis of Long Term Financial Positions or Test of Solvency

1) Debt Equity Ratio =

Outsiders Fund = Long term debts like debentures, bonds, bank loans, or borrowings. Share Holders Fund = Equity Share Holder, Preference Share Holder, Reserves & Surplus, Undistributed profits.

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2) Proprietary or Equity Ratio = 3) Fixed Assets to Net worths Ratio =

100

4) Fixed Assets to Long Term Funds =

5) Debt Service Ratio or Interest Coverage Ratio =

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