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Sukhpreet  Kaur, Lovely Professional University                                   Unit 11: Ratio Analysis




                                  Unit 11: Ratio Analysis                                       Notes


             CONTENTS

             Objectives
             Introduction
             11.1 Defi nition

             11.2 Classification of Ratios
                 11.2.1  On the basis of Financial Statements
                 11.2.2  On the basis of Functions
             11.3 Liquidity Ratios
                 11.3.1  Current Assets Ratio
                 11.3.2  Acid Test Ratio
                 11.3.3  Super Quick Assets Ratio
             11.4 Turnover Ratios
                 11.4.1  Stock Turnover Ratio
                 11.4.2  Debtors Turnover Ratio
                 11.4.3  Creditors Turnover Ratio
             11.5 Solvency Ratios

                 11.5.1 Debt-equity Ratio
                 11.5.2 Proprietary Ratio
                 11.5.3  Fixed Assets Ratio
                 11.5.4 Coverage Ratios
             11.6 Profi tability Ratios
                 11.6.1 Gross Profi t Ratio
                 11.6.2 Net Profi t Ratio
                 11.6.3 Operating Profi t Ratio
                 11.6.4  Return on Assets Ratio
                 11.6.5  Return on Capital Employed
             11.7 Summary
             11.8 Keywords
             11.9 Review Questions
             11.10 Further Readings

          Objectives


          After studying this unit, you will be able to:

               Define Ration analysis

               Make classification of ratios
               Compute the key ratios on the basis of liquidity, activity, solvency and profi tability




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