Formula of ratio analysis

LIQUIDITY RATIO:

1. CURRENT RATIO=Current Asset/Current Liabilities
2. Acid test ratio/ Quick test ratio =(Current Asset-Inventory-Prepaid Expenses)/Current Liabilities
3. Current cash debt coverage ratio= Net Cash Provided by Operating Activities/Average Current Liabilities

ACTIVITY RATIO:

1. Receivable turnover

Or Debtor turnover=Net Credit Sale/Average Net Receivable

2. Inventory turnover= Cost of Goods sold/Average Inventory

PROFITABILITY RATIO:

1. Profit margin / Profit margin on sale= (Net Income/Net Sales) %
2. Cash return on sale=Net Cash Provided by Operating Activities/Net Sales
3. Asset turnover = Net Sales/Average Asset
4. Return on asset=Net Income/Average Asser
5. Return on common stockholder’s equity= Net Income/Average Common Stock Holders Equity
6. Earning per share (EPS) = (Net Income – Preferred Dividend) /Weighted Average Common Shares Outstanding
7. Price earning ratio= Market Price per Share of Stock/Earning per Share
8. Payout Ratio=Cash Dividend/Net Income

SOLVENCY RATIO:

1. Debt to total Asset ratio= Total Debt/Total Asset
2. Cash debt coverage ratio= Net Cash Provided by Operating Activities/Average total Liabilities

1. Debt-Equity Ratio= Total Liabilities/Equity
2. Gross profit ratio= Gross Profit/Net Sales (Gross profit= Sales- Sales Return- Cost of goods sold)
3. Net profit ratio = Net Profit/Net Sales