Formulas for Financial Ratio Calculations

This assignment provides a comprehensive list of formulas for calculating different financial ratios, such as Gross Profit (GP) ratio, Net Profit (NP) ratio, Return on Capital Employed, and others. It includes a table of contents with the various ratios and their corresponding formulas. Students can use this resource to understand and calculate these important financial metrics.

Formulas for ratio

TABLE OF CONTENTS
Formulas for ratio........................................................................................................................1

Formulas for ratio
Particular Ratio
Capital employed
Total assets – current
liability
GP ratio Gross profit / sales * 100
NP ratio Net profit / sales * 100
Return on capital employed EBIT / capital employed
Return on assets
Net income / average total
assets
Operating profit ratio
Operating income/ Net
sales
Return on equity
Net Income / Shareholders
equity
Debt to asset ratio
Total liabilities/ Total
asset
Interest coverage ratio EBIT/ Interest expense
Earnings per share
(Net income - preferred
dividend) / Number of
shares outstanding
Stock turnover ratio (In times)
(Cost of goods sold/
average inventory)
Total assets turnover ratio
(Total sales revenue/
Average total assets)
Receivables or debtors turnover ratio (in days)
(Debtors * 365) / Credit
sales
Debt-equity ratio
Long-term debt /
shareholders equity
Debt to asset ratio
Total liabilities/ Total
asset
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