Cost Structure & Profitability Ratios

Gross Profit to Sales

Gross Profit Net Sales

Operating Profit to Sales

Operating Profit Net Sales

Effective Tax Rate

Income Tax Expenses Profit Before Taxes

Net Profit Margin

Net Profit Net Sales

Return on Assets

Net Profit Average Total Assets

Return on Equity (assuming there Net Profit Average Equity

are no preference shares)
= Net Profit Margin
Total Asset Turnover
(Average Asset Average Equity)
Payout Ratio (assuming there are Cash Dividend declared per share Basic EPS
no preference shares)
= Total Cash Dividend Declared Net Income
Retention Ratio (assuming there 1 Payout Ratio
are no preference shares)
= (Net Income Cash Dividend Declared) Net Income

Leverage Ratios
Times Interest Earned or

EBIT Interest Cost

Interest Coverage Ratio

Debt Equity Ratio

Long term Debt Total Equity

Liability to Equity Ratio

Total Liability Total Equity

= (Total Assets Total Equity) 1

Efficiency or Turnover Ratio

Total Asset Turnover Ratio

Net Sales Average Total Assets

Fixed Asset Turnover Ratio

Net Sales Average Fixed Assets

Current Asset Turnover Ratio

Net Sales Average Current Assets

Working Capital Turnover Ratio

Net Sales Average Working Capital

Accounts Receivable Turnover

Net Sales Average Accounts Receivable

Days of Accounts Receivable

365 days Accounts Receivable Turnover

= Average A/R Average Daily Net Sales

Inventory Turnover

Cost of Goods Sold Average Inventory

Days of Inventory

365 days Inventory Turnover

= Average Inventory Average Daily COGS

Accounts Payable Turnover

Net Purchases Average Accounts Payable

Days of Accounts Payable

365 days Accounts Payable Turnover

= Average A/P Average Daily Net Purchases

Operating Cycle

Days of Inventory + Days of Accounts Receivable

Liquidity and Cash Flow Ratios

Current Ratio

Current Assets Current Liabilities

Quick Ratio

(Current Assets Inventory Prepaid Expenses) Current

Liabilities
= (Current Investments + Cash & Bank + Trade Receivable
+ Short Term Loans & Advances) Current Liabilities

Cash Cycle

Operating Cycle Days of Accounts Payable