Accounting ratios

accounting ratios

1. Accounting Ratios Types and Formulae of ACCOUNTING RATIOS

2. Accounting Ratios ACCOUNTING RATIO is an arithmetical expression of relationship between two interrelated or related items.

3. Types of Ratios Liquidity Ratios Solvency Ratios Activity or Turnover ratios Profitability Ratios

4. Liquidity Ratios Current Ratio Liquid Ratio/Acid Test Ratio/Quick Ratio

5. Formula of Current ratio Current ratio = current assets/current liabilities

6. Formula of Liquid ratio Liquid ratio = liquid assets/current liabilities

7. Solvency Ratios Debt to equity ratio Total assets to debt ratio Proprietary ratio Interest coverage ratio

8. Formula of Debt to equity ratio DER = debt/equity

9. Formula of Total assets to debt ratio TADR = total assets/debt

10. Formula of Proprietary ratio PR = shareholders’ fund/total assets

11. Formula of Interest coverage ratio ICR = net profit before interest&tax /interest

12. Activity Ratios Debtor turnover ratio Creditor turnover ratio Inventory or stock turnover ratio Working capital turnover ratio

13. Formula of Debtor turnover ratio DTR = net credit sales/average dabtors+average bills

14. Formula of Creditor turnover ratio CTR = net credit purchases/average creditors+average bills

15. Formula of Inventory turnover ratio ITR = COGS/average stock

16. Formula of Working capital turnover ratio WCTR = sales/working capital

17. Profitability Ratios Gross profit ratio Net profit ratio Operating ratio Operating profit ratio Return on investment (ROI) ratio

18. Formula of Gross profit ratio GPR = GP/sales *100

19. Formula of Net profit ratio NPR = NP/sales *100

20. Formula of Operating ratio OR = COGS+operating expenses /sales *100

21. Formula of Operating profit ratio OPR = operating profit/sales *100

22. Formula of Return on investment ratio ROI = net profitbefore interest,tax&dividend /capital employed *100