3ACCOUNTING FUNDAMENTALS
Ratio Formula

Net profit margin Net profit / sales
Current ratio Current assets/current liabilities
Inventory turnover Cost of goods sold/average inventory
Asset turnover ratio Net sales/average total assets
Leverage ratio Total liabilities/total assets
Return on equity Net profit/total equity
Return on total assetsNet profit/total assets
Earnings per share Given
Net debt to equity ratio Total liabilities / total equity
Total return to
shareholders
(Closing price of stock-opening price of stock + divided paid)/
opening price of stock
Ratio computation –
API Limited
2014-15 2015-16 2016-17
Net profit margin 0.01 0.01 0.01
Current ratio 1.28 1.33 1.32
Inventory turnover 8.51 8.64 8.78
Asset turnover ratio 2.63 2.75 2.80
Leverage ratio 0.62 0.63 0.62
Return on equity 0.09 0.10 0.09
Return on total assets0.03 0.04 0.04
Earnings per share 0.09 0.11 0.11
Net debt to equity ratio 1.66 1.70 1.62
Total return to shareholders1.41 0.35 -0.20
Nick Scali Ltd
2014-15 2015-16 2016-17
Net profit margin 0.11 0.13 0.16
Current ratio 1.64 1.58 1.56
Inventory turnover 2.84 3.20 3.16
Asset turnover ratio 1.77 1.87 1.79
Leverage ratio 0.52 0.53 0.50
Return on equity 0.37 0.45 0.53
Return on total assets0.18 0.21 0.27
Earnings per share 0.21 0.32 0.46
Net debt to equity ratio 1.09 1.10 0.99
Total return to shareholders0.33 0.60 0.42

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