What are the necessary ratio required to submit in the bank for availing Cash Credit?is there any Software available for preparing the projected balance sheet with accounting ratios?
2 Replies
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 02 June 2009
Some of the ratios are: Current ratio, debt/ equity ratio, total outside liabilities/ tangible net worth
Suprio
(Sr. Manager Accounts & Systems)
(43 Points)
Replied 03 June 2009
Basically ratios are 4 types
1. Liquidity Ratios.
a) Current ratio Current assets / Current Liabilities
b) Acid test ratio Quick assets / Current Liabilities
c) Bank Finance- Working
Capital Gap ratio Short-term Bank Borrowing / working capital Gap
2. Leverage Ratio
a) Debt-Equity ratio Debt / equity
b) Debt-Asset ratio Debt / assets
c) Interest Coverage ratio EBIT / Interest
3. Turnover Ratio
a) Inventory - Turnover ratio Net sales / Inventory
b) Average collection period Receivables / Average sales per day
c) Receivables - Turnover ratio Net sales / Receivables
d) Fixed asset - Turnover Ratio Net sales / Fixed assets
e) Total assets - Turnover Ratio Net sales / Total assets
4. Profitability Ratio
a) Gross profit margin ratio Gross profit / Net sales
b) Net profit margin ratio Net profit / net sales
c) Net income to Total asset ratio Net profit / total assets
d) Return on Investment EBIT /Total assets
e) Return on Equity Equity Earnings / Net Worth
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