Accounting ratio

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amar ranjan ray

amar ranjan ray (Querist)
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10 January 2012 Plz explain what is accounting ratio

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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10 January 2012 'Accounting Ratio'

A way of expressing the relationship between one accounting result and another, which is intended to provide a useful comparison. Accounting ratios assist in measuring the efficiency and profitability of a company based on its financial reports. Accounting ratios form the basis of fundamental analysis.

Also called financial ratio.

Accounting Ratios Formulas:

Gross profit ratio = (Gross profit / Net sales) x 100
Net profit ratio = (Net profit / Net sales) x l00
Operating profit ratio = (Operating profit / Net sales) x 100
Expense ratios = (Individual expenses / Net sates) x 100
Operating (cost) ratio = (Operating cost / Net sales) x 100
Net profit to net worth ratio = (Net profit after interest and tax / Net worth) x 100

Return on capital employed (ROI) = (Net profit before interest, tax / Capital employed) x 100

Earning per share = net profit available for equity shareholders / Number of equity shares

Dividends per share = Dividend amount / Number of equity shares

Capital employed turnover ratio = Cost of sales / Capital employed

Fixed assets turnover ratio = Cost of sales or sales / Fixed assets

Working capital turnover ratio = Cost of sales or Net sales / Net working capital

Inventory turnover ratio = Cost of goods sold / Average inventory

Debtors (receivables) turnover ratio = Annual net credit sales / Average accounts receivable

Debtors (receivables) collection period = Accounts receivables / Net credit sales per day

Creditors turnover ratio = Net credit purchases / Average creditors

Average credit period = Average account payables / Net credit purchases per day

Current ratio = Current assets / Current liabilities

Quick ratio/Acid test ratio = Quick assets / Current liabilities

Debt Equity Ratio = Total long term debts / shareholder' funds
Debt to net worth = Total long term debt / Shareholder's funds
External-internal equity = External equity / Internal equity
Debt vs. funds = total long term debts / Total long term funds
Debt service ratio = Earnings before interest and taxes / Fixed interest charges
Fixed assets ratio =Net fixed assets / Long-term funds
Solvency (debt to total funds) ratio = Total liabilities / Total assets
Reserves to capital ratio = Reserves / Capital
Capital gearing ratio =Equity / Fixed interest hearing securities
Proprietary ratio = Proprietor's funds / Total assets

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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10 January 2012 https://www.caclubindia.com/forum/ratio-analysis-techniques-111988.asp

Also see above link fore more useful info.

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