Ratio Analysis for students of finance.pptx

this is for student

1. Financial Management Presented by Prakash Gohil WRO0737028 BATCH NO :- 65

2. 1. Definition of ratio A ratio defined as “ the indicated quotient of two mathematical expreessins and as the relationship between two or more things”. Here, ratio means financial ratio or accounting ratio which is a mathematical expression of the relationship between two accounting figures.

3. 2. Sources of financial data for analysis Annual Reports Interim Financial Statements Notes To Accounts Statement Of Cash Flows Business Periodicals Credit And Investment Advisory Services

4. 3. Types of ratios

5. (a) Current Ratio 3.1 Liquidity Ratios Various Liquidity Ratios are: Current Ratio   (a) Current Ratio

6. Quick Ratio or Acid Test Ratio   (b) Quick Ratio: (c) Cash Ratio/ Absolute Liquidity Ratio Cash Ratio  

7. (d) Basic Defense Interval/ Interval Measure: Basic Defense Interval (e) Net Working Capital: Net Working Capital 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔 −𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒔𝒆𝒔 (𝑬𝒙𝒄𝒍𝒖𝒅𝒊𝒏𝒈 𝒔𝒉𝒐𝒓𝒕−𝒕𝒆𝒓𝒎 𝒃𝒂𝒏𝒌 𝒃𝒐𝒓𝒓𝒐𝒘𝒊𝒏𝒈)  

8. 1. Capital Structure Ratios (a) Equity Ratio (b) Debt Ratio (c) Debt to Equity Ratio (d) Debt to Total Assets Ratio (e) Capital Gearing Ratio (f) Proprietary Ratio 2. Coverage Ratio (a) Debt-Service Coverage Ratio (DSCR) (b) Interest Coverage Ratio (c) Preference Dividend Coverage Ratio (d) Fixed Charges Coverage Ratio 3.2 Long-term solvency ratio/ leverage ratios

9. (a) Equity Ratio: Equity Ratio   (b) Debt Ratio: Debt Ratio   (c) Debt to Equity Ratio: Debt to Equity Ratio   (d) Debt to Total Assets Ratio: Debt to Total Assets Ratio   (e) Capital Gearing Ratio: Capital Gearing Ratio   (f) Proprietary Ratio: Proprietary Ratio   3.2.1 Capital Structure Ratio

10. 3.2.2 Coverage Ratios