Ratio Analysis Formula
| Ratio Analysis Formula Sheet | ||
| Group 1: Profitability Ratios | ||
| 1- Gross Profit Margin = | Gross Profit | * 100 |
| Sales revenue | ||
| 2- Operating Profit Margin = | Operating Profit | * 100 |
| Sales revenue | ||
| 3- Return on Capital Employed = | Profit before interest and tax | * 100 |
| Capital Employed | ||
| Group 2: Liquidity Ratios | ||
| 1- Current Ratio (Working Capital Ratio) = | Current Assets | |
| Current Liabilities | ||
| 2- Acid Test Ratio (Quick Ratio) = | Current Assets – Inventory | |
| Current Liabilities | ||
| Group 3: Efficiency Ratios | ||
| 1- Inventory Turnover = | Inventory | * 365 days |
| Cost of Sales | ||
| 2- Trade Receivables Turonver = | Trade Receivables | * 365 days |
| Revenue | ||
| 3- Trade Payables Turnover = | Trade Payables | * 365 days |
| Cost of Sales | ||
| Group 4: Financial Gearing Ratios | ||
| 1- Gearing Ratio = | Long term debts | * 100 |
| Capital Employed | ||
| 2- Interest Coverage = | Operating Profit | |
| Interest Payable | ||
| Group 5: Investor Ratios | ||
| 1- Dividend Payout Ratio = | Dividends announced for the year | * 100 |
| Profit after tax | ||
| 2- Dividend Cover Ratio = | Profit after tax | |
| Dividend announced for the year | ||
| 3- Dividend per Share = | Dividend announced for the year | |
| Number of ordinary shares in issue | ||
| 4- Dividend Yield Ratio = | Dividend per share | * 100 |
| Market price per share | ||
| 5- Earnings Per Share = | Profit after tax – Preference dividend | |
| Number of ordinary shares in issue | ||
| 6- Price Earning (P/E) Ratio = | Market Price per share | |
| Earning per share | ||
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