RATIOS - FORMULA SHEET - FINANCIAL MANAGEMENT

(A)

(B)

PROFITABILITY RATIOS

ASSET MANAGEMENT/ACTIVITY RATIOS

(in relation to sales)

Profit after Tax
NET PROFIT RATIO/
=
PROFIT MARGIN
Sales

Gross Profit
GROSS PROFIT RATIO

=
Sales

Credit Sales
DEBTORS TURNOVER

=
Average Debtors

DAYS SALES OUTSTANDING/

COLLECTION PERIOD
=
(days)

Operating Profit*
OPERATING PROFIT
RATIO

CREDITORS TURNOVER

=
Average Creditors

(in relation to investment)

Profit after Tax
RETURN ON EQUITY
=
(ROE)
Common Equity**

Average Creditors X 360

PAYMENTS PERIOD
(days)

INVENTORY TURNOVER

Credit Purchases

Operating Profit*
=

RETURN ON TOTAL
ASSETS (ROA)

Cost of Sales

Capital Employed***

Average Inventory

Profit after Tax

Average Stock X 360

STOCK PERIOD (days)

Average Total Assets

Cost of Sales

Operating Profit*
BASIC EARNING POWER =
(BEP)

Credit Sales

Credit Purchases

Sales

RETURN ON CAPITAL
EMPLOYED (ROCE)

Average Debtors X 360

Sales
TOTAL ASSET TURNOVER

Average Total Assets

Average Total Assets

(C)
SHAREHOLDER'S FUNDS/MARKET VALUE RATIOS
Dividends per share
DIVIDEND YIELD

=
Market Price per share

EARNINGS PER SHARE

DIVIDEND COVER

Profit after Tax - Pref. Div.

Notes

# of Ord. shares in issue

* Operating Profit = Profit before Interest and Taxes

Profit after Tax - Pref. Div.

** Common Equity = Ordinary Shares + All Reserves

or Total Assets - Total Debt

=
Ordinary dividends

Market price per share

Note - Long-Term Debt includes Preference Shares

because they belong to "outside'' owners who are given
preference (to ordinary shareholders) along with debt
holders when a company is liquidated.

PRICE EARNINGS RATIO =

Earnings per share

***Capital Employed=Common Equity+Long-Term Debt

or Total Assets - Short-Term Debt
or Fixed Assets + Working Capital

Market price per share

MARKET TO BOOK
VALUE RATIO

Common Equity

**** Book Value per share

=
Book value per share****

=
# of Ord. shares in issue

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RATIOS - FORMULA SHEET - FINANCIAL MANAGEMENT

(D)
DEBT RATIOS
TIMES-INTEREST-EARNED/
INTEREST COVER

Operating Profit
=
Interest chagres

Operating profit +
EBITDA
Coverage Ratio

Depreciation +
Lease payments
=

Interest + principal
pmts + lease pmts

Net Cash Flow from

CASH FLOW INTEREST
COVERAGE

Operating Activities +
= Interest Paid+Taxes Paid
Interest Paid

Net Cash Flow from

Operating Activities

OPERATING CASH FLOW

TO SALES

Sales
Net Cash Flow from

Operating Activities

OPERATING CASH FLOW

TO NET PROFIT

Profit after Tax

Long-Term Debt
GEARING RATIO

=
Capital Employed***

Total Debt
DEBT RATIO/
DEBT TO ASSET RATIO

DEBT TO EQUITY

Total Assets

Total Debt
Common Equity

(E)
LIQUIDITY RATIOS
Current Assets
CURRENT RATIO

Current Assets - Stock

QUICK RATIO

Current Liabilities

Current Liabilities

Net Cash Flow from Operating Activities

OPERATING CASH FLOW TO CURRENT LIABILITIES

=
Average Current Liabilities

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Taxes Paid

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