Great Ratio Analysis Equations
Asset Turnover Ratio Sales Average Total Assets.
Ratio analysis equations. It has mainly two types of ratio under this. They can compare absolute quantities and amounts or can be used to compare portions of a larger whole. Ratio analysis is broadly classified into four types.
It measures the sufficiency or otherwise of profit in relation to capital employed. Quick acid-test ratio Cash marketable securities net receivables Current liabilities Immediate short-term liquidity Benchmark. PG HA ROT 1 Cash ratio Cash marketable securities Current liabilities More conservative than quick ratio as it excludes net receivables all of which may not be collected Benchmark.
Financial ratio analysis compares relationships between financial statement accounts to identify the strengths and weaknesses of a company. Liquidity solvency efficiency profitability equity market prospects investment leverage and. Ratio analysis refers to a method of analyzing a companys liquidity operational efficiency and profitability by comparing line items on its financial statements.
To calculate the ratio divide the cost of goods sold by the gross inventory. Ratios can be calculated and written in several different ways but the principles guiding. PG HA ROT 40-50.
This ratio is called Return on Investment ROI or Return on capital employed. The Inventory turnover ratio. Ratio Analysis looks at the pairing of financial data in order to get a picture of the performance of the organisation.
Not many company can claim to enjoy the luxury of cash ratio being more than one. It is the ultimate test. Return on Investment or Overall Profitability Ratio.