Hr Head
Finance Manager

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Pls send me the formla for different financial ratios
From India , Madras
As far my knowledge goes financial ratios are categorised as 1.Liquidity ratio, 2. Leverage Ratio, 3. Activity Turnover ratio and 4. Profitability ratios

1. Liquidity ratio:

a. current ratio = current assets/current liabilities

b. Quick Ratio = (Current assets-Inventory)/Current liabilities

c. Cash Ratiio = (cash+Marketable securities)/ Current Liabilities

2. Leverage Ratio:

a. Debt Ratio = Total debt/ Net Assets

b. Debt-Equity Ratio= Total Debt/NetWorth

3. Activity Turnover Ratio:

a. Debtors turnover Ratio = Sales/Debtors

Collection period = 360/Debtors Turnover Ratio

b. Creditors turnover ratio = Purchases/Creditors

Payment Period = 360/Creditors Turnover ratio

c. Inventory Turnover Ratio = Sales/Inventory

Days of Inventory holding=360/ Inventory Turnover Ratio

d. Assets Turnover Ratio

i) Net Assets Turnover Ratio = Sales/Net assets

ii) Total assets Turnover Ratio = sales/ Total Assets

e. Working Capital Turnover ratio = sales/Net Working Capital

4. Profitability Ratios:

a. Gross Profit Ratio= (Gross Profit/NetSales)*100

b. NetProfit Ratio = (NetProfit/NetSales)*100

c. Operating Ratio =( Operating Profit /NetSales)*100

d. Return On Capital Employed =PBIT/Capital Employed

e. Return On Equity = PAT/NetWorth

#PBIT= Profit Before Interest and Tax

# PAT= Profit After Tax

These are some of the most important ratios.

From India , Madras
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