Accounting
Ratio
Ratio
:- vuqikr&
nks la[;kvksa ds ikjLifjd laca/k dks xf.krh; :Ik esa izdV djuk vuqikr dgykrk
gSA
Objective/Need/Advantage/Importance/Uses/Significance
of Accounting Ratio :-
1)
O;olk; dh detksj fLFkfr dk irk yxkkukA
2)
O;olk; esa Liquidity, Solvency, Activity,
Profitability dk xgu fo’ys”k.k djukA
3)
Time Series Analysis djukA
4)
iqokZuqeku esa lgk;dA
5)
Hkfo”; esa ;kstuk cukus es lgk;dA
6)
fofr; fooj.kksa ds fo’ys”k.k esa lgk;dA
7)
ys[kkadu vkadM+ksa dk ljyhdj.kA
8)
rqyukRed v/;;u esa lgk;dA
9)
vkn’kZ izekiksa dk fu/kkZj.kA
10)
Effective Control
11)
Helpful in Good Communication
12)
Helpful in POSDCORB.
13)
Helpful in Decision Making.
DisAdvantage/Limitation
of Accounting Ratio :-
1)
False Accounting Data gives false Ratos.
2)
ys[kkadu uhfr;ksa esa varj ds dkj.k nks
QeksZ dh rqyuk vfo’oluh; gksrh gSA
3)
mijh fn[kkoVA fu/kkZfjr izekiksa dk vHkkoA xq.kkRed
rRoksa dh vogsyukA
4)
,d vdsys vuqikr ds vk/kkj ij gh mfpr
fu”d”kZ ugha fudkysa tk ldrsaA
Classification/Types
of Accounting Ratio :-
|
Liquidity Ratio |
Solvency Ratio |
Activity Ratio |
Profitability Ratio |
|
·
Current Ratio/Working Capital Ratio ·
Quick Ratio/Acid Test Ratio/Liquid Ratio |
·
Debt-Equity Ratio ·
Total Assets to Debt Ratio ·
Proprietary Ratio ·
Interest Coverage Ratio |
·
Stock Turnover/Inventory Turnover Ratio ·
Debtors/Receivable Turnover Ratio ·
Creditor/Payable Turnover Ratio ·
Working Capital Turnover Ratio ·
Fixed Assets Turnover Ratio |
·
Gross Profit Ratio ·
Operating Ratio ·
Operating Profit Ratio ·
Net Profit Ratio ·
ROI (Return On Investment) |
[A] Liquidity
Ratio (rjyrk vuqikr)
1) Current Ratio/Working
Capital Ratio :- CR = Current Assets
Current
Liabilities
Current Assets = Total Assets &
Non Current Assets
OR
Current Assets = Total Assets & Fixed Assets & Noncurrent Investment
OR
Current Assets = Working Capital + Current
Liabilities
OR
Current Assets = Current Assets & Loose Tools
Current Liabilities = Short Term Borrowing + Trade Payable + Short
Term Provision + Other Current Liab.
OR
Current Liabilities = Total Assets & Shareholder Fund & Non Current Liab.
OR
Current Liabilities = Total DEBT & Long Term Debt.
OR
Current Liabilities = Trade Payable + Other Liab.
|
Current Assets |
Current Liabilities |
|
·
Current Investment ·
Stock/Inventories ·
Trade Receivables ·
B.R ·
Sundry Debtor ·
Cash in hand, Cash at bank, Cash Equivalents ·
Short Term Loans ·
Prepaid Expenses, Accrued Incomes ·
Advance Tax, Marketable Securities |
·
Short Term Borrowing ·
Bank Overdraft ·
Trade Payable ·
B.P, Sundry Creditor ·
Long Term Loan ·
Income Received in Advances ·
Outstanding Expenses ·
Unclaimed Dividend ·
Calls in Advanced ·
Short Term Provision & Tax ·
Proposed Dividend |
2) Quick Ratio/Acid Test
Ratio/Liquid Ratio :- QR/ATR/LR = Liquid Assets
Current Liabilities
|
Liquid Assets |
Current Liabilities |
|
·
Current Investment ·
Stock/Inventories ·
Trade Receivables ·
B.R ·
Sundry Debtor ·
Cash in hand, Cash at bank, Cash Equivalents ·
Short Term Loans ·
Advance Tax ·
Less Provision for Doubtful Debts |
·
Short Term Borrowing ·
Bank Overdraft ·
Trade Payable ·
B.P, Sundry Creditor ·
Long Term Loan ·
Income Received in Advances ·
Outstanding Expenses ·
Unclaimed Dividend ·
Calls in Advanced ·
Short Term Provision & Tax ·
Proposed Dividend |
Liquid
Assets
= Current Assets & Inventories(stock) & Other Current Assets as
Prepaid Expenses, Advance Tax.
[B] Solvency
Ratio (‘kks/ku {kerk vuqikr)
1)
Debt-Equity Ratio
D.E.R = DEBT OR Long
Term Debts
Equity Shareholder’s Fund or Net Worth
|
Long Term Debt |
Equity/Shareholder Fund |
|
·
Long Term Borrowing ·
Long Term Provision ·
Debentures, Mortage Loan, Bank Loan ·
Loan from Institutions in financial bank. ·
Public Deposit, Bonds, Loan from Bank |
·
Share Capital ·
Securities Premimum ·
Capital Reserve ·
General Reserve ·
Reserve & Surplus ·
Equity & Preference Share Capital ·
Profit & Loss Balance |
Long Term Debt = Total Debt &
Current Liabilities
OR
Long Term Debt = Long Term Borrowing +
Long Term Provisions
Equity/Shareholder fund = Non
Current Assets + Working Capital & Noncurrent Liabilities
2) Total Assets to Debt Ratio
T.A.D.R = Total
Assets
Debt/Long
Term Debt
|
Long Term Debt |
Total Assets |
|
·
Long Term Borrowing ·
Long Term Provision ·
Debentures, Mortage Loan, Bank Loan ·
Loan from Institutions in financial bank. ·
Public Deposit, Bonds, Loan from Bank |
·
Total Assets :- Non Current Assets (Tangible & Intangible assets)
+ Non Current Investment + Long Term Loan + Current Assets |
Total Assets = Fixed Assets + Non Current
Investment + Current Assets
OR
Total Assets = Shareholder fund + Total
Debt
OR
Total Assets = Goodwill + Non Current
Assets + Current Assets
Debt/Long Term Debt = Long Term Borrowing +
Long Term Provision
OR
Debt/Long Term Debt = Total Debt &
Current
Liabilities
3) Proprietary Ratio
P.R = Equity OR Proprietary Fund or Shareholder’s Fund or
Net Worth
Total
Assets Total Assets
|
Total Assets |
Proprietary fund/Equity/Shareholder
Fund |
|
·
Total Assets :- Non Current Assets (Tangible & Intangible assets)
+ Non Current Investment + Long Term Loan + Current Assets |
·
Share Capital ·
Securities Premimum ·
Capital Reserve ·
General Reserve ·
Reserve & Surplus ·
Equity & Preference Share Capital ·
Profit & Loss Balance |
4) Interest Coverage Ratio
I.C.R = Profit before charging Interest & Income Tax
Fixed Interest Charges
[C] Activity
Ratio (fdz;k’khyrk vuqikr)
1) Stock Turnover/Inventory
Turnover Ratio
Stock Turnover/Inventory Turnover Ratio = Cost of
Revenue from Operation or Cost of Good Sold
Average Inventory/Stock
Cost of Revenue from Operation or Cost of Good Sold
:-
1.
1st Method calculate of CGS/CRO
CGS = Net Sales (Sales – Sales Return) &
Gross Profit (Net Sales - CGS)
2.
2nd Method calculate of CGS/CRO
CGS = Opening Stock + Purchase + Direct Expenses (Wages,
Carriage) – Closing Stock
Note :-
v Cost of Good Sold is also
known as Cost of Revenue from Operation.
v Inventory Is also known as
Stock.
v Sales is also known as
Revenue from Operation.
v Sales Return is also known
as Revenue from Operation Return.
àAverage Inventory/Stock = Opening Stock + Closing Stock
2
Average age of Inventory
= Days in a Year
Inventory Turnover Ratio
2) Debtors/Trade Receivable
Turnover Ratio
T.R.T.R = Net
Credit Revenue from Operation =…….
times
Average Trade Receivable (Debtor + B.R)
Net Credit Revenue from Operation = Total Sales &
Cash Sales
OR
Net Credit Revenue from Operation = Total Revenue from
Operation & Cash Revenue from Operation
Average Trade Receivable
= Opening
Trade Receivable + Closing Trade Receivable 2
3) Creditor/Trade Payable
Turnover Ratio
T.P.T.R = Net Credit
Purchase=……. times
Average Trade Payable (Creditor +
B.R)
Net Credit Purchase = Credit Purchase & Purchase Return
Average Trade Payable = Creditor + B.R
4) Working Capital Turnover
Ratio
W.C.T.R = Net Sale
or Cost of Good Sold Net Working Capital
OR
W.C.T.R = Net
Revenue from Operation Net Working Capital
OR
W.C.T.R = Cost of
Revenue from Operation
Net Working
Capital
Net Working Capital = Current Assets &
Current
Liabilities
Cost of Revenue from Operation or Cost of Good Sold
:-
1st Method calculate
of CGS/CRO
CGS = Net Sales (Sales – Sales Return) &
Gross Profit (Net Sales - CGS)
2nd Method calculate of CGS/CRO
CGS = Opening Stock + Purchase + Direct Expenses (Wages,
Carriage) – Closing Stock
5) Fixed Assets Turnover Ratio
F.A.T.R = Net
Sale or
Cost of Good Sold
Fixed Assets (Less Depreciation)
6) Current Assets Turnover
Ratio
C.A.T.R = Net
Sale or
Cost of Good Sold
Current Assets
7) Capital Turnover Ratio
C.T.R = Net
Sale or
Cost of Good Sold
Capital Employed
[D] Profitability
Ratio (ykHknk;drk vuqikr)
1) Gross Profit Ratio
G.P.R = Gross
Profit × 100
Revenue from Operation or
Net Sales
2) Operating Ratio O.R = Cost of Good
Sold + Operating Expenses – Operating
Income × 100 Revenue
from Operation or Net Sales
OR
O.R = Cost of revenue from
Operation + Operating Expenses – Operating Income × 100
Revenue from
Operation or Net Sales
|
Operating Expenses |
Operating Income |
|
·
Employee Benefit Expenses + Depreciation + Office Exp. +
Administration exp + Selling Exp. + Distribution Exp. + Discount + Bad Debts
+ Interest on Short Term Loans. |
·
Commission Received + Discount Received |
3) Operating Profit Ratio
O.P.R = Operating Profit × 100
Revenue from Operation or
Net Sales
|
Operating Profit |
Operating Income |
|
·
Operating Profit = Gross Profit – Operating Expenses + Operating
Income |
·
Commission Received + Discount Received |
Note- ;fn iz’u esa Net Profit
fn;k gks rks Operating
Profit dks fuEu izdkj ls Kkr fd;k tkrk gSA
Operating Profit = Net Profit – Operating Income +
Operating Expenses
4) Net Profit Ratio
N.P.R = Net Operating Profit OR Net Profit After Tax
Revenue from Operation or Net Sales
|
Net Profit |
Indirect Expenses |
Other Income |
|
Net
Profit = Gross Profit – Indirect Expenses & losses + Other Income |
Indirect
Expenses =Office Expenses + Selling Expenses + Interest on Long Term
Borrowing + Accidental Losses. |
Income
from Rent + Commission Received + Discount Received |
5) ROI (Return On Investment)/Return
on Capital Employed/Yield on Capital
ROI = Net Profit before Interest, Tax dividends × 100
Capital Employed
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