Out Of This World Ratio Analysis Formula
Profitability ratios and activity ratios 4.
Ratio analysis formula. Introduction As a manager you may want to reward. Quick acid-test ratio Cash marketable securities net receivables Current liabilities Immediate short-term liquidity Benchmark. Financial ratios are usually split into seven main categories.
It is a quantitative tool that is used to assess all financial ratios formulas of the business. Financial leverage ratios 5. Liquidity solvency efficiency profitability equity market prospects investment leverage and coverage.
Ratio analysis refers to a method of analyzing a companys liquidity operational efficiency and profitability by comparing line items on its financial statements. It simply means the total liabilities divided by total stakeholders equity. One of them is the Ratio analysis formulas.
The Current Ratio formula is Current Assets Current Liabilities. Return Net Profit - Non-trade Adjustments not Depreciation Interest on Long term debts Provision for Tax --. Activity Inventory Cost of goods sold Inventory turnover Accounts receivable Sales on credit Accounts receivable turnover Total assets Sales Total asset turnover Fixed assets Sales Fixed.
The current ratio also known as the working capital ratio measures the capability of a business to meet its short-term obligations that are due within a year. PG HA ROT 1 Cash ratio Cash marketable securities Current liabilities More conservative than quick ratio as it excludes net receivables all of which may not be collected Benchmark. The ratio considers the weight of total current assets versus total current liabilities.
Net income Net profit margin Sales 4. A higher ratio is preferable indicating higher profitability. A higher ratio will be due to the result of one or more of the following factors.