Ratio Analysis

Ace RaHos Can be eKpreLted in 3 dieent way

) pHe HQHO' aHo wheue kecond igt
he aHo s alway! t.
peucentaqe reto exprewed In eums o o

B Rate! Rato erpreled in nooh Hmeg,

RaHos

Balante heet Revenue Staement

Ratto Raio

I Balance sheet Ratt0s

Current RaHoR CwoTKing capital Rato 9
A fomWa!
AbilÈHeI of6 ie to geneuae Cah
Current AreH na thort peu tod of Hme.
lets
CuYrent liabiliHe than a yeanj
shot teum l(ab liHeg
which ke
withinayeus Hrne. Come. ayabe
B Signijècance
to hind out
whetheH or not the
enough liauu dity tomeek Company haJ
C. Gieneual StandaYd obligaHons:
(hiahy the beCument
mt
-atHettaHo,twice
he G 1
D: windouw 1esing
delibeate manipuaton: boo of Atounte
to (mnprove upon
untowabie turrent ata
2 Quick Rato (iaud otetto
Aurent
Aid tert ratto)
ASeH
hoHce which Can
Quics Assets, short eaise Cath
QweK abiliHe ushott
went lYaboHe
a Which becO me duo
 B Stgnihi canee
Calewated to 6ind Oyt whethey or not a
ha He ability to meet (tr current
company
obtigatHons
vey shortt notee
ttitk Afres=
Quick Asses = current Ascek -Stok Prepaid expentel
Quick ia ibiiH e?= cument líabilitey -Bonk d-incoroe recd.
|n Advn (e

D G1eneyal standard ß

3 Debt - Eayuity RaHo

AFomwai
aBorrowed fundu
Debt
eywtyshaeholdeye lundi

Indiate the extent ch eoMpany'k dependence on

Shaue holde kor Phe unde employe
9reqtey dependence ron Rhareholders
RiOidey Hinancial stabillHy but AeDI to
share holdes

Aeck nandal tabliy but Aeyrnt to thareh

-oldeur wll be high.
Revenue sBatemntRatos
1: Gitogs prot Rato

Giross pYohit
BSigniitante
ndicate profitability fthe psoduc
2 EBIT Margin Rato
A Fomnwa i
EBIT
Netsoye
B Meaning
EBIT Net pOt Beore tar t ntet on Bomoweq
unds
C: sigriki Cance 8
(ndicae level of pxita bility belore nt4est ang
tax bure W e to net sale, ete

3 Net prot Batto

Cost of goods Sold t 7
AveMage stocs: Home
.oPening +do¢ng
2.

B Significance
Pe dicates the no oh Hme, sto tk i! getng conveutd
nto sales duing the The apidity ith which.
Stok qet convetec oto eae dependu upon tep
demand

3 Net RHOit RAto

Net proit Alteytax

Bslaniicance :
tnticates pritabiliy o a buitne
 4 Stock turnovet Rato or Inventoy turnovey Ratia
A forwa &
Cost o 200ds Sol
Avenage stouk
G oP Stock t.Uona stok
2

(when openingis nat given, closing ls taken Avg

stotk)

B Signiitantei
indicatey getino Convesteol
nto gall duing rapidiy''wf ukhich sto gets
conveed tnto Sale depends upon demand kor
companys produt A highly eioentmanagement
will be succeuhul n suitaining d emand fo the
produt at a Conctant rate.
tn stock Humovey inaicater Lack of ehidenty
5:Stock velodtyo Inventory holding Pesiod
A FoTOula
Aveuage sO ck X 365 day

B Signi7icance
indicates tbe no Hmes sto(k s qetHng conveyte
Lale durng The Mpidiy wth which.
Stok ConveHted nto sale depends upon
demand hor eompany!s pood ut Hrghe the
Stock tumove bete alll be he liqyuiaity o&
(ompany which depend oh gtock holding
peytod stok velouty
 OPeNaHng cyde tHme
A:Fo'
(HP + DeP
inventory Ls debtors cKe ditos
holding petod CollecH On payment peId
OR StockK OR CHedio rs
Velociy
velouHy
DY
B stqnificance
Indicater the tíoyidity available he company
to buicneL opeuaton.

I : CoMposite Ratos
IReum on caplta Employed Reun on Imv
ROI)
AFornWaiiernhgs sefoe thteyegt &tax
9roEB|Tc
Capita emptoyed

B SLgnig icanre
undlicater proiabiliy e to total unds
(nvesment

2: Retun on PAoptetors Un ds CReun on net woxth)

A:FoMUlo,
Net pHOit Atey tax
PHopxl etors und

B
B: Slgnijicante 8
tndica le puogtabil'ty wh uegesence to
Sharehnoldele hund.
 Fi

3 RetuAn on Eajity share capital

Net pohit Ae tax - Pterente dividend

eqyuy ghare capital

B: sígniHcance
Indieale proitabiliy rejrene to Qajuity
share CapitaQ

EarningA pet ehare (EPS)

a variant oh Return on eayulty
Capital share
Rem s olcwated not a a
but tn he horm oh proit eaned peACenNtal.
pey hare
EPS =Net proit Ajtey têx -
pHeferente
NO: of eou'ty ehares, dividend
4 4. 0ebtor's Tumovey RatO
A Fowa 8

CYedit Sale
Debtors t B/R
taken qt gogQie besoe
t

deduetH ng povii On 0T doubtlu debt

wl (nude ttade
ebtos onl
Bsigni7icante
indicates no oh Hoe amount
debto rs´ in a yeay lhe Heaed rom
debtot wi) ealie Ch HaptdHy wtth whieh
wll depend upon
peyred O redit allo
peuiod. caled
Wedtodebtors Süch credit
Debtox' velouy
DebterS velou (2 months 52 weeKI365 daye
DebtoT Unovey
12 monhs/ 52 weet/368 clay
redit saley
 Debtos t t B/R K 12 monthg/ 52 week 358 day
CYeit sale

5. C4edit turnove Rato

CHedit purchaley
CHedtors t B/P
incude trade Heitors only.

ndicates the o Hnes amount s paid to

ereditors ha yeaA. No ra paymenB made to he
creditors oill depend upon poiod o credit
allowed by CredibOYS Such a Hedit peutod
Called Cteditorig veocity.AT0iihbA
7Creditosnt BR (mOnHhs3) weea
Credit purchal ey a6S day

FyncHonal lassihcaton of Ratos

)solvenuy posiHo.,
© current RaHO (short teAM
2 QuitK HatHo (imrme diate solventy)

) Level oh Etideny
Ostok tumoveu Ratto (EHioenty n sholk mon
Debtor's tumovey Ratl. (eicienty Indebtor
managjement)

m) ajidity
stOK HUYOOVe RaHo
(2Debtorls HUmoe Rt.
 eayiy
h of No
Hefeene
to
Shaueholde
w eauty fhe among dicdbuted
acUy epuoit indicate
he ratto this
hae eawty otf no
pod dividend ayuity Atual
CDP) ehaAe peH Dividend 2
eayuityRharebo<dey the among
dist Available
or hepot ndicates aHo his
eharel. eaWty no:ro
Dividend Rehrence tax Ae proit Net
CERSJ hare peu Faing
AddiHonalRaHo Y
RaHo oyuity Debt b
ttueture Capltal N)
capital: haue vity 8ReHUm
hund,proptetor
emploed on
RetAh 2
enployed junde ejerence
to W8.
RaHo jtpo Net
RaHo man 3
EBIT 2
cae. Reheence
to
Ruoitability w A )
 3 Dividend Pay -out Rato
AFoNla
DPS
EPS

this aHo Indiate Helatonhp ln eum ol o

can be distibuted & the
blw he poitR that
dicttibuted among the ehare
puot aaly
-holdeus

4: Paice Eaming atto :

MauKet yalei Pe hare
EPS

5. Debt seviCe CoveMage roaHo.

Eaunin9sb4 Inteet &tax

mteyest On bottowed 7undet Rejeuenre Dlvidend + Rtinipal

ant 0f toah Hepaymer
the capaciy oh a Company to epay
with intet theueon
lt bomowed 7undi along
Cate hat the eompany ha
Highe laHo hdi
enou Mayuoiy to pay mtelert Aepay
puindpal amt of (0an,.

6 Dest seuvice Rato

AHormula,!
Eouni ng t behore tax (heyet
mBeyest yhorowed jund
on,

veuijea he capaiHy ot company to pay inienet

on borOUIed undu
 Numeica l

VeyHeal Baance sheet hor ABC tda on 31 march /20

PauHuio
A] shaHeholde's undu
1) shae capita
eay wity hae capital 2,00,000.
(Oo peeyene hare Capltal t 00, 000 3o0 O00

t )Reeuve & surplu

2,00, OO0
i0 cHOi Asce.
UndeuunHno commicdon. Cio,000)
4,90,000
B] t BoMowed hunds
|2.o debente
S,90,000.

APpicattoD o un da &
A Hked a e
) tangible
Lond&
Building , 20, co00 2, o,o00

0) ntahqible N

1) Capital wIP 75,00 O

29s,00 2,9},000
S 7

B] (nves trnente
Cong feArm Investnernt 90,00 e

C o Capital WIP.
R) uYrent
 Book debt. 2,00,000
Mauketable inverttnee
Cauh & Bank balane s0,000
Blls eceivable 1S, 00036sgo6

ü) Non- Quick ARsek.

2,00, 000
hventeYe
hot 10, 0002;10, 00O S,1S, O00
Advance for. purhale

curent iabiliHe
) @uie
I,60,000
Accounk payable.
7S,o00
Atceptanes ol en,
Prov botteX (-ddv tax)

) bon QuCK
L09000
Bank oveHdraft
2s,000 ,28,0oe
incomne recd n Advance

total capital eMploye d S,90,00o

P&L Ae.
Pauti(utou
SaleS ||890900
(+) Cauh sates 290,000 20,0, o00
2,00,000.
NELSALES
,00,000

1) RM conaumed
LS0,000
PuHchal 0,sO,000 12,,00,0o
(2,00000)/1o,0,o00)
ii) Fattony cot
fatoy Qrpente! (Y so,00
G1808 MARGIN. 3,s0,000
opetatng expeneg
A Admin ep I, 20,000
Rent 3°, 000
Depi 30,000,g0,000.
) selling ep
Selling erpents 1s,000
bad d t 2s,o00,
tt) einane
1, 4s, 000
+) op |ncone.
BDsHecOVeL B0,000
koy ality
Divide 3,000
(0,000 295,ooe
2,79o0
 OPevating tncome
2,10,000

E1T
(t) non op. ncome.
Inteuet Heeied 2,000

L2l,s00 )
|273,s00
mi pau'd |(2,000)
EBT
(uo,oo o)
(ORHovin for tax
22, Soo
AppropaHors
ranie to C7CMR

eitt (sooool
( ) urTent RaHo.
Current Asses =5,15,000
Curent (iabiiteg 3,10, OOG
unavowHable Cwent aHo
he geneua HandaHd 2 |

2 2) Quck BaHo.
Quick Asses
Pwlk iabiliHe
tavoura ble uick uato a tI more than
He qeneal ktandard
ar faYOUAabie mmideate. Solventy podHon
Quick Atsele to cuent iabuoHo.
B,68,o
el 3 70,000

Appoximately , thu Hhis can be conatdeued

satshao4
4
Absotuke uñk RaHO MaMK etaie ovment
Cah t BanK + Maketable ceeunte
Quik VabiHes
(HOu Can taKe Current

O31.

FHoPietory Ratto. (0R Net wotth atio)

RMoprietoY I kunds X|00
tota A$
ndicaor oh ong teum solveny
 PF= Share Capitol t R&S -FicHow ASee
TA Fixed Arse t (nvestment + unent ARset

9,00, O0 O.
Va)ue tncuding Adv tax
494g o

His UhfaOurable ar fe (e han [H

qeneual etandard o 3 , Appro XiMaBely
67 whichndicate that the lOne f teum
Solvency pouttoh company not sifatory

Debt -
Debt
Eauity Value of Chare holdou'
tunds,
his HaHo (s ie han 1 which tndicaler
finanual Stabilly to the company bt
h en shareholdeS
um ehare holdeH uil he po00.

1) Capita Cneaing RaHo G1eoH Ratto

Capltal entiHed to Axed rate oh Reun
caplta not entiHed to FRR

numeHator Debentuey t BqnK loant Rueerente

share Capital
Denomingtor = eajuity thare capital t RS-fctow
ase

3,90, OO0

this abecte he deciton mating capaity

 the
&6iceny ot the compant
(es Hhan y he
As the
more
company
Is having COm poHed
which will ahect the nooth
kuntHonirg company the
Said o be Loly geaHed
Hato

cloing stock
twong Capital.
eese bete he Hato

non-atik aise, less the lo aqe

Captt bete awt( be the
lfouidity a HeGa to w0ìng Capltal Stock
to wooKing Cap atio o en han
Suggest that the compan y haing enough
and at the Hme ( aso_ndicael
etieieniy the dept of stor worring
(a' Debtor to worriDg Capttal uato.
losin. debro Deb tors t bjts e cerable)
Debtos.
woreing capita
 this ua Ho Indica tes the povton of debtor blocred
wooKing capital Hhis AaHO showd be approX
more Hhan J00 Y%
but in hie Compah
which Sugaest hat lage portton o working
be eceivable t*om debfo

o GYoss prohit Ratio

Net sale
3,So,oO0
|8,00,o00

u EBT Maqin Ratto

EBIT xl00
NetSauer
2,73, Soo X100
18,0 O, 000

ptOfit Rato,
2 opeuaHng
Net opeaHno RAOit
Net sale
2, 70,0oo Xlo0
1%,00,000

L2) Net psOßit Aato

Netproit Afte tase,
Net sale
22o 22|So

compaoble nho, cant mae Qhy Commesh