| Short–term Financial Position or Test of Liquidity |
| (a) Current Ratios | = Current AssetsCurrent Liabilities |
| (b) Quick or Acid Test or Liquid Ratio | = Liquid AssetsCurrent Liabilities |
| (c) Absolute Liquid Ratio | = Absolute Liquid AssetsCurrent Liabilities |
| (d) Interval Measure | = Liquid AssetsAvg.Daily Operating Expenses |
| Current Assets Movement (Asset Management Ratios) |
| (a) Inventory /Stock Turnover Ratio | =Cost of Goods SoldAvg.Inventory at Cost |
| (b) Debtors or receivables Turnover Ratio/Velocity | =Net Credit Annual SaleAvg.Trade Debtors |
| (c) Average Collection Period | =Total Trade DebtorsSale per Day |
| (d) Creditors / Payable Turnover Ratio / Velocity | =Net Credit Annual PurchaseAvg.Trade Creditors |
| (e) Average Payment Period | =Total Trade Creditos / PayableAvg.Daily Purchase |
| (f) Working Capital Turnover Ratio | =Sales or Cost of SalesNet Working Capital |
| Analysis of Long-term Financial Position or Test of Solvency |
| (a) Debt Equity Ratio | =Outsiders FundsShareholders′ Fundsor=Outsiders′ EquitiesInternal Equities |
| (b) Funded Debt to Total Capitalization Ratio | =Funded DebtsTotal Capitalization × 100 |
| (c) Ratio of Long term Debt to Shareholders, Funds (Debt Equity) | =Long term DebtsShareholders′ Funds |
| (d) Proprietary or Equity Ratio | =Shareholders FundsTotal Assets |
| (e) Solvency Ratio | =Total Liabilities to OutsidersTotal Assets |
| (f) Fixed Assets Net Worth Ratio | =Fixed Assets after DepreciationShareholders′ Funds |
| (g) Fixed Assets Ratio or Fixed Assets to Long Term Funds | =Fixed Assets after DepreciationTotal long term Fund |
| (h) Ratio of Current Assets to Proprietary funds | =Current AssetsShareholders′ Funds |
| (i) Debt-Service or Interest Coverage | =Net Profit (before Int. & Taxes)Fixed Interest Charges |
| (j) Total Coverage or Fixed Charge Coverage | =EBITTotal Fixed Charges |
| (k) Preference Dividend Coverage Ratio | =Net Profit (before Int.& Tax)Preference Dividend |
| (l) Cash to debt-Service Ratio or Debt Cash Flow Coverage | =CF1 +SFD1 − Tax RateCF = Annual cash flow before Int. & TaxSFD = Sinking fund appropriation on debt |
| Analysis of Profitability |
| (i) General Profitability: | |
| (a) Gross Profit Ratio | =Gross ProfitNet Sale × 100 |
| (b) Operating Ratio | =Operating CostNet Sale × 100 |
| (c) Expenses Ratio | =Particular ExpenseNet Sale × 100 |
| (d) Net Profit Ratio | =Net Profit after TaxNet Sale × 100 |
| (e) Operating Profit Ratio | =Operating ProfitNet Sale × 100 |
| Overall Profitability |
| (a) Return on Shareholders’ Investment (RoI) | =Net Profiti after Tax & InterestShareholders′ Fund × 100 |
| (b) Return on Equity Capital | =Net Profit after Tax − Pref.DividendPaid up Equity Capital × 100 |
| (c) Earnings per Share (EPS) | =Net Profit after Tax − Pref.DividendNumber of Equity Share × 100 |
| (d) Return on Gross Capital Employed | =Adjusted Net ProfitGross Capital Employed × 100 |
| (e) Return on Net Capital Employed | =Adjusted Net ProfitNet Capital Employed × 100 |
| (f) Return on Assets | =Net Profit after TaxAvg.Total Assets × 100 |
| (g) Capital Turnover Ratio | =Sale or Cost of SaleCapital Employed × 100 |
| (h) Fixed Assets Turnover Ratio | =Sale or Cost of Goods SoldFixed Assets × 100 |
| (i) Working Capital Turnover Ratio | =Sale or Cost of Goods SoldNet Working Capital × 100 |
| Market Test or Valuation Ratio |
| (a) Dividend Yield Ratio | =Dividend per ShareMarket Value per Share |
| (b) Dividend Payout Ratio | =Dividend per Equity ShareEarnings per Share |
| (c) Price/Earnings (P/E) Ratio | =Market Price per Equity ShareEarnings per Share |
| (d) Earning Yield Ratio | =Earnings per ShareMarket price per share |
| (e) Market Value Book Value Ratio | =Market value per shareBook value per share |
| (f) Market Price to Cash Flow Ratio | =Market price per shareCash flow per share |
| Market Test or Valuation Ratio |
| (a) Capital Gearing Ratio | =Equity Share Capital + Reserve & SurplusPref.Capital + Long term Debt bearing Fixed Interest |
| (b) Total Investment to Long Term Liabilities | =Shareholders Fund + Long term LiabilitiesLong term Liabilities |
| (c) Debt Equity Ratio | =Outsiders FundsShareholders Funds |
| (d) Ratio to Fixed Assets to Funded Debt | =Fixed AssetsFunded Debts |
| (e) Ratio of Current Liabilities to Proprietors fund | =Current LiabilitiesShareholders′ Funds |
| (f) Ratio of Reserve to Equity Capital | =ReservesEquity Share Capital × 100 |
| (g) Financial Leverage | =EBITEBIT − Interest & Pref.Dividend |
| (h) Operating Leverage | =ContributionEBIT |
