Financial Ratio Formulas | Accounting

Here is a list of some important financial ratio formulas.

1. Current Ratio = Current Assets/Current Liabilities

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2. Net Working Capital Ratio = Net Working Capital/Net Assets

3. Quick Ratio = Quick Assets/Liquid Liabilities

4. Cash Position Ratio = (Cash + Marketable Securities)/ Liquid Liabilities

5. Proprietary Ratio = Shareholders’ Fund/ Total Asset (or) Total Resources

6. Solvency Ratio = Outside Liabilities/Total Assets

7. Fixed Assets to Proprietors’ Fund Ratio = Fixed Assets/Proprietors’ Fund

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8. Current Assets to Proprietors’ Fund Ratio = Current Assets/Proprietors’ Funds

9. Capital Gearing Ratio = Fixed Interest Bearing Funds/Equity Share Capital

10. Debt-Equity Ratio = External Equities/Internal Equities or Outsiders Fund/Shareholders Fund

11. Fixed Assets to Current Assets = Fixed Assets/Current Assets

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12. Reserves to Equity Capital Ratio = Revenue Reserve/Equity Capital

13. Gross Profit Ratio = (Gross Profit/Net Sales) X 100

14. Operating Ratio = [(Cost of Goods Sold + Operating Expenses)/Net Sales] X 100

15. Material Consumed Ratio = (Material Consumed/Net Sale) X 100

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16. Conversion Cost Ratio = [(Manufacturing Expenses – Material Cost)/Net Sales} X 100

17. Particular Expense Ratio = (Particular Expense/Net Sales) X 100

18. Net Profit Ratio = (Net Profit/Net Sales) X 100

19. Return on Assets = (Net Profit/Net Sales) X 100

20. Return on Capital Employed = Operating Profit/Capital Employed

21. Return on Shareholders’ Equity = (Net Profit/Shareholders’ Fund) X 100

22. Stock Turnover Ratio = Cost of Goods Sold (or) Net Sales/Average Inventory

23. Debtors Turnover Ratio = Credit Sales/Average Debtors or Total Sales/Closing Debtors

24. Debt Collection Period = Months (or Days in a Year /Debtors Turnover

25. Creditors Turnover Ratio = Net Credit Purchases/Average Accounts Payable

26. Average Payment Period = (Accounts Payable/Net Credit Purchase) X 365

27. Working Capital Turnover Ratio = Cost of Sales/Net Working Capital

28. Fixed Assets Turnover = Cost of Sales/Net Fixed Assets

29. Total Capital Turnover = Cost of Sales/Total Capital Employed

30. Capital Turnover = Cost of Sales/Capital Employed

31. Interest Coverage = EBIT/Fixed Interest Charges

32. Dividend Coverage = NP after Tax & Interest/Preference Dividend

33. Equity Shareholders’ Coverage = Net Profit (after Interest, Tax and Preference Dividend)/Equity Dividend

34. Earning per Equity Shares = Profits Available for Equity Shares/No. of Equity Shares

35. Dividend Yield = Dividend per Share/Market Price per Share

36. Price Earning Ratio = Market Price of a Share/Earning per Share

37. Fixed Interest Coverage = Operating Income/Annual Interest Expenses

38. Dividend per Share = Dividend Paid to Equity Shareholders/No. of Equity Shares

39. Dividend Payout Ratio = Dividend per Share/Earning per Share

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