Table showing summary of Accounting Ratios

Table showing summary of Accounting Ratios :

S.No	Description of the Ratio	Formula	Notes
1.	Current ratio		Current assets include cash in hand, cash at bank, sundry debtors, bills receivable, marketable securities, stock and prepaid expenses. Current liabilities include Bank overdraft, sundry creditors, bills payable and outstanding expenses.
2.	Liquid Ratio		Liquid assets mean current assets less stock and prepaid expenses
3.	Absolute Liquid Ratio		Absolute Liquid assets means cash, bank and short term investment. Liquid liabilities means current liabilities less bank overdraft.
4.	Debt Equity Ratio		Long term debts include Debentures, long term loans from banks and financial institutions. Shareholders funds include Equity share capital, Preference share capital, Reserves and surplus.
5.	Proprietory Ratio		Tangible assets include all assets except goodwill, preliminary expenses etc.
6.	Gross Profit Ratio		Gross profit = Sales — Cost of goods sold. Cost of goods sold = Opening stock + Purchases — Closing stock Net sales = Total sales (cash & credit) — Sales returns

7.	Net Profit Ratio		Net profit = Gross profit —(Administration, Selling and distribution and financial expenses expenses)
8.	Operating Profit Ratio		Operating profit = Net profit + Non-operating expenses — Non-operating income [OR] Gross profit — Operating expenses
9.	Operating Ratio
10.	Capital Turnover Ratio		Capital employed = Equity share capital + Preference share capital + reserves and surplus + long term borrowed funds
11.	Fixed Assets Turnover Ratio		Fixed assets = Fixed assets —Depreciation
12.	Stock Turnover Ratio		Average stock = opening stock + closing stock divided by two.
13.	Debtors Turnover Ratio		Average accounts receivable is calculated by dividing the opening balance of debtors and bills receivable and closing balance of debtors and bills receivable by two.

14.

Creditors Turnover Ratio

Average accounts payable is calculated by dividing the opening balance of creditors and bills payable and closing balance of creditors and bills payable by two.

Accounts | Sneha Agarwal | August 19, 2021

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