Governor Olli Rehn: Dialling back monetary restraint
Ratio Analysis
1. NATURE OF ACCOUNTS
ASSETS
CURRENT ASSETS
QUICK ASSETS / LIQUID ASSETS
Cash, Bank, Account Receivable, Notes Receivable, Marketable Securities & Accrued interest on notes receivable
OR (TOTAL CURRENT ASSETS - INVENTORY)
OTHER CURRENT ASSETS
Merchandise Inventory, Bills Receivable, Short Term Investment, Accrued Income, Supplies, Prepaid Expenses etc.
NON CURRENT ASSETS
Furniture, Building, Machinery, Equipment, Land, Long Term Investment & Motor Vehicle, etc
LIABILITIES
CURRENT LIABILITIES
Accounts Payable, Notes Payable, Bills Payable, Bank Overdraft, Advance from customer, Short Term Loan, Accrued
Expenses, Unearned Income, Outstanding, Dividend Declared, Accrued interest on notes payable, etc.
NON CURRENT LIABILITIES
Long Term Loan, Bonds Payable, Debenture Payable, Mortgage Payable.
SHARE HOLDER’S / STOCK HOLDER’S EQUITY
Share Capital, Share Premium, Retained Earning, General Reserve, & any Other Reserve.
OR (TOTAL ASSETS – TOTAL LIABILITIES)
RATIO ANALYSIS
1. WORKING CAPITAL
Working Capital = Current Assets – Current Liabilities
2. CURRENT RATIO
Current Assets
Current Ratio = = Ans : 1
Current liabilities
3. CASH RATIO
Cash
Cash Ratio = = Ans : 1
Current liabilities
4. ACID-TEST RATIO / QUICK RATIO / LIQUID RATIO
Quick Assets
Quick Ratio = = Ans : 1
Current liabilities
5. (a) INVENTORY TURNOVER / MERCHANDISE TURNOVER
(a) Inventory Turnover = Cost of Goods Sold = Times
Average Inventory
(b) INVENTORY TURNOVER DAYS / DAYS SUPPLY IN INVENTORY
365
(b) Inventory Turnover Days = = Days
Times
6. (a) ACCOUNTS RECEIVABLE TURNOVER
Net Credit Sales
(a) Receivable Turnover = = Times
Average Accounts Receivable
(b) ACCOUNTS RECEIVABLE TURNOVER DAYS
365
(b) Receivable Turnover Days = = Days
Times
7. (a) ACCOUNTS PAYABLE PAYMENT PERIOD
(a) Payable Payment = Net Credit Purchases = Times
Average Accounts Paybale
(b) PAYABLE PAYMENT DAYS
365
(b) Payable Payment Days = = Days
Times
8. TOTAL DAYS / AVERAGE DAYS OF OPERATING CYCLE
Total Days of Operating Cycle = Accounts Receivable Turnover days + Inventory Turnover Days
1
2. 9. DEBT RATIO
Debt Ratio = Total liabilities X 100 = Ans %
Total Assets
10. EQUITY RATIO
Total Shareholder' s Equity
Equity Ratio = X 100 = Ans %
Total Assets
11. ASSETS TURNOVER
Assets Turnover = Total Net Sales X 100 = Ans %
Total Assets
12. EARNING PER SHARE
Earning per Share = Net Income = Ans
No. of Shares
13. PRICE EARNING RATIO
Market Price = Ans
Price Earning Ratio =
Earning per Share
14. DIVIDEND PER SHARE
Dividends = Ans
Dividend per Share =
No. of Shares
15. DIVIDEND YIELD
Dividend per Share
Dividend Yield = = Ans
Market Price
16. BOOK VALUE PER SHARE
Total Shareholder' s Equity
Book Value per Share = = Ans
No. of Shares
17. RATE OF RETURN ON TOTAL ASSETS
Return on Total Assets = Net Income X 100 = Ans %
Total Assets
18. RATE OF RETURN ON SHAREHOLDER’S EQUITY
Net Income
Return on Shareholder' s equity = X 100 = Ans %
Total Shareholder' s Equity
19. RATE OF COST OF GOODS SOLD
Rete of Cost of Goods Sold = Cost of Goods Sold X 100 = Ans %
Total Net Sales
20. RATE OF GROSS PROFIT
Gross Profit X 100 = Ans %
Rete of Gross Profit =
Total Net Sales
21. RATE OF OPERATING EXPENSES
Operating Expenses
Rete of Operating Expenses = X 100 = Ans %
Total Net Sales
22. RATE OF NET PROFIT
Net Profit
Rete of Net Profit = X 100 = Ans %
Total Net Sales
23. CASH FLOW MARGIN
Cash from Operation
Cash Flow Margin = X 100 = Ans %
Total Net Sales
2