R.A. is a technique for analyse the Performance of the
business concern by getting details from their Accounting
Statements.There are many type of RATIOS and the use of it
also depends on the different users.
For ex. Debt Equity Ratio is more profitable for The
Financial institutions as for getting the details of the
company that how much the equity funds are available for
the each unit of loan provided by the Financial Institution,
And Creditors are more concern about the Liquidity Ratios.
ratio analysis is a tool which enables to bankers or
lenders to arrive the factors of the concern
tha follpwing factors are
4.efficient management position
5.safety and secured position of debts
ratio analysis with its ratios is
3.gross profit ratio
4.net profit ratio
5.debt equity ratio
6.asset turnover ratio
8.asset turnover ratio
RATION ANALYSIS HELPS IN COMPARISION OF BUSINESS OPERATIONS
TO A SIMILAR BSNS IN SAME INDUSRTY. ITS HELPS IN DECISION
MAKING AND ALSO TO SOLVE THOSE PROBS WHICH ARE TO BE FACED
IN FUTURE .
1. CURRENT RATIO : TOTAL CURRENT ASSETS / TOTAL CURRENT LIAB
2.QUICK RATION : CASH + RECEIVABLES+GOV SECURITY/ TOTAL CL
3.WORKING CAPTITAL RATIO : TCURRENT ASSETS-TCURRENT LIABS.
4.LEVERAGE RATIO-TOTAL LIAB/NET WORTH
INCOMENT STATEMENT RATIO ANALYSIS
GP RATIO GP/SALES
NP RATIO NP AFTER TAX/SALES
INVENTORY TURNOVER RATIO = NET SALES/AVG INV AT COST.
ACC RECEIVABLES RATIO= ACC REC / DAILY CREDIT SALES
ASSET RETURN RATIO= NP BEFORE TAX / TOTAL ASSETS
RETURN ON INVESTMENT=NP BEFORE TAX / NET WORTH
A Ratio is a simple mathematical expression. It is a number
expressed in terms of another number, expressing the
quantitative relationship b/w the two. RA is the technique
of interpretation of financial statements with the help of
various meaningful ratios.