Skip to main content

How To Learn Ratio Analysis Formulas In 15 Minutes

What is Ratio Analysis?
So basically, Ratio Analysis is a process to gain a deeper insight into the financial health and the current & probable performance of the company by comparing and analyzing the information provided in the financial statements.

To compare and analyze the information recorded in the financial statements, certain formulas are used. Let’s have a look at them.





Ratio Analysis Formulas

Liquidity Ratio
Liquidity ratio focuses on the company’s current assets and liabilities to analyze if it can pay the short term debts.

Current Ratio - Current Assets/Current Liabilities

Quick Ration -  Liquid Assets/Current Liabilities

Absolute Liquid Ratio -  Absolute Liquid Assets/Current Liabilities

Profitability Ratio
This ratio analyzes how a company uses its assets and how effectively it generates the profit from the equities and assets.

Ratios
Formulas
Gross Profit Ratio
Gross Profit / Net Sales X 100
Operating Profit Ratio
Operating Profit / Net Sales X 100
Net Profit Ratio
Operating Profit / Net Sales X 100

Working Capital Ratio
This ratio analyzes if the company can pay off the current debts or liabilities using the current assets.

Ratios
Formulas
Inventory Ratio
Net Sales / Inventory
Debtors Turnover Ratio
Total Sales / Account Receivables
Debt Collection Ratio
Receivables X Months or days in a year / Net Credit Sales for the year

Capital Structure Ratio
The capital structure ratio analyzes how structurally a firm uses the capital or funds to finance its operations.

Ratios
Formulas
Debt Equity Ratio
Total Long Term Debts / Shareholders Fund
Proprietary Ratio
Shareholders Fund/ Total Assets
Capital Gearing Ratio
Equity Share Capital / Fixed Interest Bearing Funds

Overall Profitability Ratio
This ratio measures how profitable a particular firm or company is, or how it can turn its assets and capital into profits for future use.

Ratio
Formula
Overall Profit Ability Ratio
Net Profit / Total Assets



Tips to Learn Ratio Analysis Formulas Easily

1. Understand
  • Understand the ratios rather than just memorizing them.
  • Write down ratios & work them out several times using different numbers.


2. Categorize
  • Categorize financial ratios according to the type of information they provide.
  • Place financial ratios in six categories.

3. Prioritize
  • Prioritize the key financial ratios.
  • Pick out the five most important ratios and learn them first.


4. Create Visual Representation
  • Try to create visual representation of each element of the ratio in your head.
  • Connect each symbol by creating a story to keep them all together.



For more information to click here :

http://primeassignmenthelp.bravesites.com/entries/general/50-interesting-topics-from-the-desk-of-online-nursing-case-study-helpers
https://all4webs.com/adamjackson/home.htm?43669=62298
https://all4webs.com/adamjackson/blogs.htm?15768=36205
https://sandbox.zenodo.org/communities/ruby-assignment-help/?page=1&size=20
https://bandzone.cz/fan/maxfisher1408?at=blog&bi=598554
http://adamjackson.affiliatblogger.com/26490943/single-vs-double-entry-system-common-bookkeeping-assignment-topic
http://adamjackson.affiliatblogger.com/26491018/3-creative-ways-to-make-genetics-assignment-interesting-to-score-a
https://assignmenthelponline.cabanova.com/
https://sandbox.zenodo.org/communities/mentorship-assignment-help/?page=1&size=20
https://bandzone.cz/fan/maxfisher1408?at=blog&bi=598565
https://assignmentprime.bcz.com/5-mandatory-skills-for-writing-a-perfect-hospitality-management-assignment/
https://www.vingle.net/posts/2763730
https://www.vingle.net/posts/2763736

http://articles.abilogic.com/66098/get-top-quality-dissertation-writing.html
http://articles.abilogic.com/66094/get-trusted-reliable-assistance-your.html
http://www.streetarticles.com/college-university/what-makes-an-absolute-need-of-hr-assignment-help
http://articles.abilogic.com/99941/get-touch-incomparable-assignment-writing.html
http://www.olaladirectory.com.au/choose-assignment-proofreading-services-and-never-make-silly-writing-mistakes/
http://www.olaladirectory.com.au/law-assignment-writing-help-by-an-expert-assignment-writer-of-australia/
http://www.olaladirectory.com.au/write-the-best-marketing-assignment-using-these-3-witty-techniques/
http://www.olaladirectory.com.au/4-witty-tips-to-write-an-exceptional-hr-assignment/
http://www.streetarticles.com/college-university/ways-to-encourage-yourself-to-write-lengthy-college-assignments
http://www.olaladirectory.com.au/3-things-you-ought-to-never-say-during-a-job-interview/

Comments

Post a Comment

Popular posts from this blog

Last Minute Assignment Help: Combat the Fear of Missing the Deadline

Do you need to submit your assignment tomorrow and you didn’t even start writing it? Are you stressed about missing the deadline? If you’re nodding your head in affirmation, then you must be in the need of last minute assignment help . Well, don’t worry, because Assignment Prime is here for you. We provide you urgent assignment help at the lowest prices without compromising with the quality of the document. Yes, you read it right! We make sure that the quality of the papers don’t degrade if you take writing service from us. Other than this feature, there are several other features which we are providing with our urgent assignment writing service. They are - 1. On-time Delivery We make sure to provide your assignments on time so that you do not miss the university’s deadline. We also try to deliver your document before time so that you get enough time to go through it. If you find any error which needs to be corrected, then you can ask our academic writers to do it for you
Post a Comment
Read more

How To Write A Perfect SAT Essay | Step by Step Explanation | SAT Essay ...

Want to get admission to the college of your dreams? Well, all you have to do is write an impressive SAT essay. But, don’t know how to do that in 50 minutes? No worries. This video brings you a step-by-step guide on writing a good SAT essay that will showcase your analysis, reading, and writing skills. Brought to you by the experts of Assignment Prime, the steps include reading the prompt, reading the passage, making the outline, writing, and then finally reviewing the essay. https://www.youtube.com/watch?v=mr8gXqdNn_k For More Information to Click Here :- https://assignmentprime.blogspot.com/2019/06/coursework-writing-tips.html https://helpassignmentprime.wordpress.com/2019/06/06/got-stuck-in-statistics-assignment-try-5-amazing-tools-to-make-it-perfect/ https://penzu.com/public/e6ce792f https://australianassignments.weebly.com/assignment-help-in-australia/want-to-complete-administrative-assignment-list-of-5-must-known-law-clauses https://helpassignmentprime.wordpress
Post a Comment
Read more

How To Motivate Yourself To Write An Essay | Write Essay More Quickly

Finding motivation in life is not that easier, especially for students who have to work on their essay writing task. Are you too not able to find motivation for your essay writing task? If yes, then watch this video in which the experts of Assignment Prime have presented some tips to get your motivation back. Experts suggest that in order to find motivation for essay writing, students should stay away from distractions, break the entire task in small chunks, work with self-driven people, and the work fun. If you do this, then you will surely be able to find motivation for essay writing. For more such informative and helpful videos, stay tuned to our YouTube channel. For more information to click here :- https://helpassignmentprime.wordpress.com/2019/08/29/5-steps-to-draft-an-outline-for-your-autocad-assignment/ http://assignmentprime.bcz.com/4-ways-to-write-good-thesis-introduction-of-your-biochemistry-assignment/ https://sandbox.zenodo.org/communities/sas-assig
Post a Comment
Read more