Fields
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Calculation
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Example
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Current Ratio
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Total Current Assets/ Total Current Liabilities
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Current Ratio = 3.56 : 1
It's mean , Company has 3.56 of Current Assets to meet 1.00 of its Current Liability
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Quick Ratio
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Quick Assets/ Total Current Liabilities
Where,
Quick Asset = (Total Current Assets - Stock In Hand )
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Quick Ratio = 0.95 :1
It's mean , Company has 0.95 of Quick Assets to meet 1.00 of its Current Liability
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Debt to Equity Ratio
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Loans Liability /Net Worth
Where,
Net Worth = Capital A/c + Net Profit
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Debt to Equity Ratio = 0.22 :1
It means Company has 0.22 cents of Debt and only 1.00 in Equity to meet this obligation.
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Day Sales Outstanding
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(Current Receivables/Total Credit Sales) X Number of Days
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Day Sales Outstanding = 48 Days
Company takes approximately 48 days to convert its accounts receivables into cash. Compare this to their Terms of Net 30 days.
This means at an average their customers take 18 days beyond terms to pay.
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Inventory Turnover Ratio
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Sales account / Closing Stock
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Inventory Turnover Ratio = 0.75
This indicates that Company is able to rotate its inventory in sales 0.75 times in one fiscal year.
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Wkg Capital Turnover Ratio
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Net Sales / (Current Asset - Current Liabilities)
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Wkg Capital Turnover Ratio = 0.77
This indicates that Company is able to rotate its working Capital in sales 0.77 times in one fiscal year.
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Accounts Payable to Sales %
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[Accounts Payables / Net Sales ] x 100
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Accounts Payable to Sales % = 46.58%
Company’s 46.58% of Sales is being funded by its suppliers.
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Profit Margin %
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(Net Profit / Net Sales) x 100
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Profit Margin % = 50%
This indicates Company makes 0.50 paises on every Rs 1.00 of Sale
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Gross Profit %
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Gross Profit / Total Sales x 100
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Gross Profit % = 93.22%
This indicates the percentage of profit earned from direct operations
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Operating Cost %
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(Cost Of Goods Sold + Operating Expenses) / Net Sales * 100
Where
Cost of Goods Sold =
( Opening Stock+
Net Purchase +
Direct Expenses) – Closing Stock
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Operating Cost % = 6.79%
This is referred to as the percentage of operating cost with respect to the total turnover.
This ratio is useful in making decisions in the areas of cost control, cost reduction etc
The less percentage of cost means higher margin to earn profit
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Return On Investment %
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(Net Profit / Capital a/c + Net Profit)*100
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Return On Investment % = 17.60%
Company generates a 17.60% percent return on the capital invested by the owners of the company
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Return on Working Capital %
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Net Profit / Working Capital *100
Where,
Working capital = Current Asset - Current Liabilities
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Return on Working Capital % = 0.08%
This indicates Company generates 0.08% percent return on the Wkg capital invested by the owners of the company
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