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Financial Ratio Formulae

By HWA | Publish On: March 19, 2010 | Posted In:

Often times we struggle to analyze a company’s performance and get lost into the detail of the annual reports and financial statements. Here are some ratios which can quickly help us assess the health of a company. Hope you find these useful in your analysis of financial statements!

Liquidity Ratio

1.Current Ratio = Current Asset / Current Liabilities
2.Quick Ratio = (Current Asset – Inventory)/ Current Liabilities
3.Net working capital to sales ratio = Current Asset – Current Liabilities/ Sales

Profitability Ratio

1.Gross Profit Margin = Gross Income / Sales
2.Operating Profit Margin = Operating income/ Sales
3.Net Profit Margin = Net Profit/ Sales

Operating Ratio
A ratio that shows the efficiency of a company’s management by comparing operating expense to net sales. Calculated as:
= Operating Expense/ Net Sales

1.Asset Turnover Ratio = Revenue/ Average Asset
2.Sales/Revenue Per Employee = Revenue/ Number of employees
3.Operating Cycle Ratio = Days Inventory Outstanding + Days Sales outstanding – Days Payable Outstanding offer three kinds of services: Assignment Help, Live homework help, Thesis Help and Online Tuitions for students in their college or University. We provide finance assignment help, Accounting assignment help, Managerial Accounting Assignment help, Corporate Finance Assignment help covering topics like
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