Statutory Liquidity Ratio (SLR a minimum proportion of their Net Demand and Time

Liabilities as liquid assets in the form of cash, gold and un-encumbered approved
government securities. Cash Reserve Ratio (CRR) Cash Reserve Ratio (CRR) As per
Section 42(I) of RBI Act 1934, Cash Reserve Ratio (CRR) is the amount of funds that all
Scheduled Commercial Banks (SCBs) are required to maintain with RBICo-operative
Banks Urban Co-operative Banks are controlled by State governments and RBI, while
other co-operative banks are controlled by National Bank for Agriculture and Rural
Development (NABARD) and State Governments

What is Petty Cash Book?

The number of daily petty expenses of large business organizations such as
paper, ink, conveyance, stamp expense etc. is so large that if these are
recorded in the cash book, it creates wastage of time of the head cashier
and makes the cash book unnecessarily voluminous.
book.
Types of Petty Cash Book;
Petty cash book is of two types:
(1) Columnar petty cash book and
(2) Imprest petty cash book.
Columnar:The difference between the amount of cash receipt and the
total amount of cash payments is called balance. This balance is always a
debit balance.

Imprest:Under this imprest system of petty cash book, the head cashier
provides a fixed amount of money to the petty cashier in advance for
meeting expenditure of a particular period

For example,
on 1st Jan. 2003 head cashier pays $500 to the petty cashier in advance. In
the month of January, the petty cashier spent $400 and submits a statement
of expenditure for the spent amount to head cashier.
The head cashier pays him again $400 for meeting expenditure of
February.
Petty cashier starts his petty cash book on 1st February with a cash balance
of $500.
In this way, at the beginning of every month, the petty cashier will possess
$500 as an imprest fund to meet up day to day expenditures.

Ratio Analysis – Ratios Formulae

August 21 2014 Written By: EduPristine
We have discussed various ratios and their importance. Starting with introduction to ratio
analysis and classification of ratios, we have explained the importance of using various
ratios and the formulae of how they are calculated. This blog post gives you the formulae
for the ratios that we have discussed in this series.

Liquidity Ratios
S. No. RATIOS FORMULAS

1 Current Ratio Current Assets/Current Liabilities

2 Quick Ratio Liquid Assets/Current Liabilities

3 Absolute Liquid Ratio Absolute Liquid Assets/Current Liabilities

S. No.

RATIOS

Current Ratio

FORMULAS

Current Assets/Current Liabilities

S. No.

RATIOS

Quick Ratio

FORMULAS

Liquid Assets/Current Liabilities

S. No.

RATIOS

Absolute Liquid Ratio

FORMULAS

Absolute Liquid Assets/Current Liabilities

Profitability Ratios
S.
RATIOS FORMULAS
No.

1 Gross Profit Ratio Gross Profit/Net Sales X 100

2 Operating Cost Ratio Operating Cost/Net Sales X 100

3 Operating Profit ratio Operating Profit/Net Sales X 100

4 Net Profit Ratio Operating Profit/Net Sales X 100

Return on Investment Net Profit After Interest And Taxes/ Shareholders Funds
5
Ratio or Investments X 100

Return on Capital
6 Net Profit after Taxes/ Gross Capital Employed X 100
Employed Ratio

Net Profit After Tax & Preference Dividend /No of Equity

7 Earnings Per Share Ratio
Shares

Dividend Per Equity Share/Earning Per Equity Share X

8 Dividend Pay Out Ratio
100

Net Profit after Tax & Preference Dividend / No. of

9 Earning Per Equity Share
Equity Share

10 Dividend Yield Ratio Dividend Per Share/ Market Value Per Share X 100

Market Price Per Share Equity Share/ Earning Per Share

11 Price Earnings Ratio
X 100
 Net Profit to Net Worth
12 Net Profit after Taxes / Shareholders Net Worth X 100
Ratio

S. No.

RATIOS

Gross Profit Ratio

FORMULAS

Gross Profit/Net Sales X 100

S. No.

RATIOS

Operating Cost Ratio

FORMULAS

Operating Cost/Net Sales X 100

S. No.

RATIOS

Operating Profit ratio

FORMULAS

Operating Profit/Net Sales X 100

S. No.

RATIOS

Net Profit Ratio

FORMULAS

Operating Profit/Net Sales X 100

S. No.

5
RATIOS

Return on Investment Ratio

FORMULAS

Net Profit After Interest And Taxes/ Shareholders Funds or Investments X 100

S. No.

RATIOS

Return on Capital Employed Ratio

FORMULAS

Net Profit after Taxes/ Gross Capital Employed X 100

S. No.

RATIOS

Earnings Per Share Ratio

FORMULAS

Net Profit After Tax & Preference Dividend /No of Equity Shares

S. No.

RATIOS

Dividend Pay Out Ratio

FORMULAS

Dividend Per Equity Share/Earning Per Equity Share X 100

S. No.

RATIOS

Earning Per Equity Share

FORMULAS

Net Profit after Tax & Preference Dividend / No. of Equity Share
S. No.

10

RATIOS

Dividend Yield Ratio

FORMULAS

Dividend Per Share/ Market Value Per Share X 100

S. No.

11

RATIOS

Price Earnings Ratio

FORMULAS

Market Price Per Share Equity Share/ Earning Per Share X 100

S. No.

12

RATIOS

Net Profit to Net Worth Ratio

FORMULAS

Net Profit after Taxes / Shareholders Net Worth X 100

Working Capital Ratios

S.
RATIOS FORMULAS
No.

1 Inventory Ratio Net Sales / Inventory

2 Debtors Turnover Ratio Total Sales / Account Receivables

Receivables x Months or days in a year / Net Credit

3 Debt Collection Ratio
Sales for the year

4 Creditors Turnover Ratio Net Credit Purchases / Average Accounts Payable

5 Average Payment Period Average Trade Creditors / Net Credit Purchases X 100

Working Capital Turnover

6 Net Sales / Working Capital
Ratio

Fixed Assets Turnover

7 Cost of goods Sold / Total Fixed Assets
Ratio

8 Capital Turnover Ratio Cost of Sales / Capital Employed

S. No.

RATIOS

Inventory Ratio

FORMULAS

Net Sales / Inventory

S. No.

RATIOS

Debtors Turnover Ratio

FORMULAS

Total Sales / Account Receivables

S. No.

RATIOS

Debt Collection Ratio

FORMULAS

Receivables x Months or days in a year / Net Credit Sales for the year

S. No.

RATIOS
Creditors Turnover Ratio

FORMULAS

Net Credit Purchases / Average Accounts Payable

S. No.

RATIOS

Average Payment Period

FORMULAS

Average Trade Creditors / Net Credit Purchases X 100

S. No.

RATIOS

Working Capital Turnover Ratio

FORMULAS

Net Sales / Working Capital

S. No.

RATIOS

Fixed Assets Turnover Ratio

FORMULAS

Cost of goods Sold / Total Fixed Assets

S. No.

RATIOS

Capital Turnover Ratio

FORMULAS

Cost of Sales / Capital Employed

Capital Structure Ratios
S. No. RATIOS FORMULAS

1 Debt Equity Ratio Total Long Term Debts / Shareholders Fund

2 Proprietary Ratio Shareholders Fund/ Total Assets

3 Capital Gearing ratio Equity Share Capital / Fixed Interest Bearing Funds

4 Debt Service Ratio Net profit Before Interest & Taxes / Fixed Interest Charges

S. No.

RATIOS

Debt Equity Ratio

FORMULAS

Total Long Term Debts / Shareholders Fund

S. No.

RATIOS

Proprietary Ratio

FORMULAS

Shareholders Fund/ Total Assets

S. No.

RATIOS

Capital Gearing ratio

FORMULAS

Equity Share Capital / Fixed Interest Bearing Funds

S. No.

4
RATIOS

Debt Service Ratio

FORMULAS

Net profit Before Interest & Taxes / Fixed Interest Charges

Overall Profitability Ratio

S. No. RATIOS FORMULAS

1 Overall Profit Ability Ratio Net Profit / Total Assets

S. No.

RATIOS

Overall Profit Ability Ratio

FORMULAS

Net Profit / Total Assets