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Financial Ratio Formulae

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Financial Ratio Formulae
Financial Ratio Formulae http://www.HelpWithAssignment.com Liquidity Ratio

1. Current Ratio = Current Asset / Current Liabilities

2. Quick Ratio = (Current Asset – Inventory)/ Current Liabilities

3. Net working capital to sales ratio = Current Asset - Current Liabilities/ Sales

Profitability Ratio

1. Gross Profit Margin = Gross Income / Sales

2. Operating Profit Margin = Operating income/ Sales

3. Net Profit Margin = Net Profit/ Sales

Operating Ratio
A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
= Operating Expense/ Net Sales

1. Asset Turnover Ratio = Revenue/ Average Asset

2. Sales/Revenue Per Employee = Revenue/ Number of employees

3. Operating Cycle Ratio = Days Inventory Outstanding + Days Sales outstanding - Days Payable Outstanding

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