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Ratio Analysis Formulas

This document provides formulas for various financial ratios used to analyze a company's liquidity, solvency, asset management, and profitability. It includes ratios such as current ratio, quick ratio, accounts receivable turnover, inventory turnover, return on assets, profit margins, and more. The ratios are calculated using information from a company's balance sheet and income statement to evaluate its financial performance and health.

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Jessa Sabrina Avila
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777 views1 page

Ratio Analysis Formulas

This document provides formulas for various financial ratios used to analyze a company's liquidity, solvency, asset management, and profitability. It includes ratios such as current ratio, quick ratio, accounts receivable turnover, inventory turnover, return on assets, profit margins, and more. The ratios are calculated using information from a company's balance sheet and income statement to evaluate its financial performance and health.

Uploaded by

Jessa Sabrina Avila
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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RATIO ANALYSIS FORMULAS

LIQUIDITY RATIOS 5. Accounts Payable Turnover (APT)


= Net CP excluding freight-in / Ave. AP
1. Working Capital = TCA – TCL • Ave. AP = (AP, begin + ending) / 2
2. Current Ratio = TCA / TCL
3. Quick Ratio = Quick Assets / TCL 6. Average Payment Period (APP)
• Quick Assets = Cash + Cash = 365 days / APT
equivalents + Net Receivables + • 366 if leap year
Marketable securities (2012, 2016, 2020, 2024, 2028)

7. Cash Conversion Cycle or Net Cash


SOLVENCY RATIOS
Cycle
= ACP + ASP – APP; or
1. Financial Leverage / Equity Multiplier
= Operating Cycle – APP
= TA / TE
• Operating Cycle = ACP + ASP
_________________________________________
2. Debt to Equity Ratio = TL / TE
8. Fixed Assets Turnover
3. Debt Ratio = TL / TA = Net Sales / Ave NFA
• Ave Net Fixed Assets
4. Equity Ratio = TE / TA = (NFA, begin + end) / 2

5. Times Interest Earned = EBIT / Int Exp 9. Assets Turnover = NS / Ave TA


or Operating income / Interest Expense a. Ave TA = (TA, begin + end) / 2
• EBIT: earnings before interest & tax
• Operating Income = EBIT
PROFITABILITY RATIOS

ASSET MANAGEMENT RATIOS 1. Gross Profit Rate = GP / NS


2. Operating Profit Margin = Op Income / NS
1. Accounts Receivable Turnover (ART) or Income before int & tax / NS
= Net CS / Average (Net) AR • Operating Income (EBIT) = income
• Ave. AR = (AR, begin + ending) / 2 before interest & tax

2. Average Collection Period (ACP) 3. Net Profit Margin = NI after int & tax / NS
= 365 days / ART 4. Return on Assets = NI / Ave TA
• 366 if leap year • Ave TA = (TA, begin + end) / 2
(2012, 2016, 2020, 2024, 2028)
_________________________________________ OR
DuPont Model
3. Inventory Turnover (IT)
= COGS / Ave. Inventory Return on Investments = ROS x Asset Turnover
• Ave. Inventory = (Inv, begin + end)/2 = (NI / NS) x (NS / Ave TA)
= NI / Ave TA
4. Average Sales Period (ASP) 5. Basic Earning Power – EBIT / Ave TA
= 365 days / IT • EBIT: earnings before interest & tax
• 366 if leap year • Ave TA = (TA, begin + end) / 2
(2012, 2016, 2020, 2024, 2028)

by: Jessa Sabrina Avila

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