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Ratio

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Shilpa Lakhina
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22 views

Ratio

Uploaded by

Shilpa Lakhina
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Ratio

Introduction
ACCORDING TO MYERS, RATIO ANALYSIS IS A STUDY OF RELATIONSHIP AMONG VARIOUS FINANCIAL FACTORS IN A BUISNESS .

Meaning
THEY ARE EXPRESSED IN ANY :

1)PERCENTAGE METHOD
2)RATE METHOD 3)NET RATIO METHOD

4)FRACTION METHOD

Profitability ratios

introduction
Yielding

profit Advantageous Lucrative


"Is my company as profitable as it should be?"

Types Gross profit ratio Net profit ratio Return on capital employed

Gross profit ratio


Formula :
Gross profit * 100 / net sales Net sales = gross sales- sales return

SIGNIFICANCE : HIGHER RATIO INDICATES THAT ALL THE OPERATING EXPENSES ARE BEING COVERED.

Net profit ratio


Formula :

Net profit after tax *100 / net sales

SIGNIFICANCE : IT SHOWS THE AMOUNT LEFT FOR SHAREHOLDERS AFTER MEETING ALL EXPENSES AND COSTS.

RetuRn on capital employed or Ratio of RetuRn


Formula : Net profit before tax and interest / capital employed .

Significance :- high ratio shows capital efficiency..

Conclusion
Admire a small ship, but put your freight in a large one; for the larger the load, the greater will be the profit upon profit.

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