Ral|o Ara|ys|s

A2 Accourl|rg
orlerl
wral are ral|os
L|qu|d|ly
- urrerl ral|o
- Ac|d lesl ral|o
3rarero|der ral|os
- 0|v|derd per srare
- 0|v|derd y|e|d
Ell|c|ercy ral|os
- 0ear|rg
- 3loc| lurrover
- Assel lurrover
- 0eolors co||ecl|or per|od
Prol|lao|||ly ral|os
- 0ross prol|l
- Nel prol|l
- Relurr or cap|la| erp|oyed
L|r|lal|ors ol ral|o ara|ys|s
Ral|o Ara|ys|s
Loo|s al lre pa|r|rg ol l|rarc|a| dala |r order lo gel
a p|clure ol lre perlorrarce ol lre orgar|sal|or
Ral|os a||oW a ous|ress lo |derl|ly aspecls ol lre|r
perlorrarce lo re|p dec|s|or ra||rg
Ral|o Ara|ys|s
A||oWs you lo corpare perlorrarce oelWeer
deparlrerls ard over l|re
Ral|o Ara|ys|s
Four d|llererl lypes ol ral|os car oe used lo reasure:
Prol|lao|||ly - roW prol|lao|e lre l|rr |s
L|qu|d|ly - lre ous|resses ao|||ly lo pay
lrveslrerl/srarero|ders - a||oWs ous|resses lo
|oo| al r|s| ard polerl|a| earr|rgs ol |rveslrerls
0ear|rg - |oo|s al lre oa|arce oelWeer |oars ard
srares |r a ous|ress
urrerl Ral|o
urrerl ral|o |oo|s al lre ||qu|d|ly ol lre ous|ress
Loo|s al lre ral|o oelWeer urrerl Assels ard urrerl L|ao|||l|es
6urrent Rat|o = 6urrent Assets : 6urrent L|ab|||t|es
ldea| |eve| - approx 1.5 : 1
Need erougr currerl assels lo cover currerl ||ao|||l|es
ll |ls loo r|gr rears loo rary currerl assels e.g. r|grl rave loo
rucr sloc|, cou|d use lre rorey l|ed up |r currerl assels rore
ellecl|ve|y
ll |ls loo |oW you rur lre r|s| ol rol oe|rg ao|e lo reel currerl
||ao|||l|es ard you cou|d rave ||qu|d|ly proo|ers
Ac|d Tesl
Ac|d lesl ral|o |s arolrer Way ol |oo||rg al ||qu|d|ly
ll ras oeer argued lral sloc| la|es a Wr||e lo corverl lo casr so a rore
rea||sl|c ral|o Wou|d |grore sloc|
(urrerl assels - sloc|) : ||ao|||l|es
1:1 seer as |dea|
Aga|r |l |l |s loo r|gr rears lral lre ous|ress |s very ||qu|d - ray oe ao|e lo
use lre casr lor olrer acl|v|l|es lo |rcrease perlorrarce
ll |l |s loo |oW lrer lre ous|ress ray lace Wor||rg cap|la| proo|ers
3ore lypes ol ous|ress reed rore casr lrar olrers so ac|d lesl Wou|d oe
expecled lo oe r|grer
lrveslrerl/3rarero|ders
3rarero|ders are |rleresled |r lre lo||oW|rg ral|os:
0|v|derds per srare- lola| d|v|derds / ruroer ol srares |ssued
A r|grer l|gure rears lre srarero|der gol a |arger relurr
0ood lo corpare W|lr corpel|lors
8us|resses car |rprove lr|s lrerse|ves oy |rcreas|rg d|v|derd
payrerls
0|v|derd y|e|d - ord|rary srare d|v|derd / rar|el pr|ce x 100 -
orpares lre relurr arourl W|lr Wral Wou|d oe reeded lo purcrase
a srare
Tre r|grer lre oeller
Tr|s ral|o var|es da||y W|lr crarges lo a corpar|es srare pr|ce
0ear|rg
Tr|s |s ar ell|c|ercy ral|o
Loo|s al lre re|al|orsr|p oelWeer oorroW|rg ard
l|xed assels
0ear|rg Ral|o = Lorg lerr |oars / ap|la| erp|oyed
x 100
Tre r|grer |l |s lre grealer lre r|s| lre ous|ress |s
urder |l |rleresl rales |rcrease
Assel Turrover ral|o
Loo|s al a ous|resses sa|es corpared lo lre assels used
lo gererale lre sa|es
Assel lurrover = sa|es (lurrover) / rel assels
Nel assels = Tola| assels - currerl ||ao|||l|es
Tre va|ue W||| vary W|lr lre lype ol ous|ress:
- 8us|resses W|lr a r|gr va|ue ol assels Wro rave leW sa|es W|||
rave a |oW assel lurrover ral|o
- ll a ous|ress ras a r|gr sa|es ard a |oW va|ue ol assels |l W|||
rave a r|gr assel lurrover ral|o
- 8us|resses car |rprove lr|s oy e|lrer |rcreas|rg sa|es
perlorrarce or gell|rg r|d ol ary add|l|ora| assels
3loc| lurrover ral|o
Arolrer ell|c|ercy ral|o
Loo|s al roW ell|c|erl|y a corpary corverls sloc|
lo sa|es
3loc| lurrover ral|o = cosl ol sa|es / sloc|
l|gr sloc| lurrover rears |rcreased ell|c|ercy
loWever |l deperds or lre lype ol ous|ress
LoW sloc| lurrover cou|d rear poor cuslorer
sal|slacl|or as peop|e r|grl rol oe ouy|rg lre sloc|
0eolors co||ecl|or per|od
Tr|s |s arolrer ell|c|ercy ral|o
Tr|s |oo|s al roW |org |l la|es lor lre ous|ress lo gel oac|
rorey |l |s oWed
0eolors co||ecl|or ral|o = deolors x 35 / lurrover
Tre |oWer lre l|gure lre oeller as gel casr rore qu|c||y
loWever sorel|res reed lo oller cred|l lerrs lo
cuslorers so lr|s ray |rcrease |l
Need lo ersure |eep lrac| ol ary crarges |r cred|l lerrs
as lrese srou|d |rpacl lr|s ral|o
Prol|lao|||ly
Prol|lao|||ly reasures |oo| al roW rucr prol|l lre l|rr
gererales
Prol|l |s lre ruroer ore oojecl|ve ol rosl l|rrs
0|llererl reasures ol prol|l - gross ard rel
- 0ross prol|l -lola| reverue- var|ao|e cosls (cosl ol sa|es)
- Nel Prol|l - 0ross prol|l - overreads
Prol|lao|||ly
ross prof|t |ooks at how much of the sa|es revenue |s
converted |nto prof|t
ross Prof|t Harg|n = ross prof|t | turnover x 100
Tre r|grer lre oeller
A||oWs lre l|rr lo assess lre |rpacl ol |ls sa|es ard roW
rucr |l cosl lo gererale (produce) lrose sa|es
A gross prol|l rarg|r ol 35 rears lral lor every 1 ol
sa|es, lre l|rr ra|es 35p |r gross prol|l
Prol|lao|||ly
Nel prol|l |oo|s al roW rucr ol lre sa|es reverue |s |ell
as rel prol|l
Nel Prol|l Varg|r = Nel Prol|l / Turrover x 100
lrc|udes overreads / l|xed cosls
Nel prol|l |s rore |rporlarl lrar gross prol|l lor a
ous|ress as a|| cosls are |rc|uded
A ous|ress Wou|d |||e lo see lral lr|s ral|o ras |rproved
over l|re
Prol|lao|||ly
Arolrer prol|lao|||ly ral|o - |oo|s al operal|rg prol|l
ard cap|la| erp|oyed oy lre ous|ress
Relurr or ap|la| Erp|oyed (R0E) = Prol|l /
cap|la| erp|oyed x 100
Typ|ca||y srou|d oe 20-30
Need lo corpare lo prev|ous years ard corpel|lors
lo gel a c|ear p|clure
ar |rprove lr|s oy |rcreas|rg prol|ls W|lroul
|rcreas|rg l|xed assels / cap|la|
L|r|lal|ors w|lr Ral|o Ara|ys|s
To oe rosl oerel|c|a| lre resu|ls reed lo oe
corpared W|lr olrer dala |rc|ud|rg:
- Tre resu|ls lor lre sare ous|ress over prev|ous years
- Tre resu|ls ol ral|o ara|ys|s lor lre|r corpel|lors
- Tre resu|ls ol ral|o ara|ys|s lor olrer l|rrs |r olrer
|rduslr|es
0lrer laclors reed lo cors|der
Tre rar|el lre ous|ress |s lrad|rg |r
Tre pos|l|or ol lre l|rr |r lre rar|el
Tre qua||ly ol lre Wor|lorce ard raragererl
Tre ecoror|c erv|rorrerl
3urrary
Ral|os are used lo |oo| al lre perlorrarce ol a ous|ress
L|qu|d|ly ral|os |oo| al lre l|rrs ao|||ly lo reel |ls deols
urrerl ral|o = currerl assels - currerl ||ao|||l|es
Ac|d lesl ral|o = currerl assels- sloc| - currerl ||ao|||l|es
3rarero|der ral|os lrese are ral|os lral srarero|ders Wou|d oe |rleresled |r
0|v|derds per srare- lola| d|v|derds / ruroer ol srares |ssued
0|v|derd y|e|d - ord|rary srare d|v|derd / rar|el pr|ce x 100
Ell|c|ercy ral|os - roW We|| lre ous|ress |s operal|rg
0ear|rg = Lorg lerr |oars / ap|la| erp|oyed x 100
3loc| lurrover = 3loc| lurrover ral|o = cosl ol sa|es / sloc|
Assel lurrover = Assel lurrover = sa|es (lurrover) / rel assels
0eolors co||ecl|or per|od deolors x 35 / lurrover
Prol|lao|||ly ral|os - assess lre prol|lao|||ly ol lre ous|ress
0ross prol|l = 0ross prol|l / lurrover x 100
Nel prol|l = Nel prol|l / lurrover x 100
Relurr or cap|la| erp|oyed = Prol|l / cap|la| erp|oyed x 100
L|r|lal|ors ol ral|o ara|ys|s - reed lo oe ao|e lo corpare l|gures over l|re ard oelWeer corpar|es lo
oe rosl ellecl|ve