Access over 35 million academic & study documents

Management accounting useful ratios

Content type
User Generated
Showing Page:
1/5
Management Accounting - Useful Ratios.
Shortterm Financial Position or Test of Liquidity
(a) Current Ratios
=
Current Assets Current Liabilities
(b) Quick or Acid Test or Liquid Ratio
=
Liquid Assets Current Liabilities
(c) Absolute Liquid Ratio
=
Absolute Liquid Assets Current Liabilities
(d) Interval Measure
=
Liquid Assets Avg.Daily Operating Expenses
Current Assets Movement (Asset Management Ratios)
(a) Inventory /Stock Turnover Ratio
=
Cost of Goods Sold Avg.Inventory at Cost
(b) Debtors or receivables Turnover Ratio/Velocity
=
Net Credit Annual Sale Avg.Trade Debtors
(c) Average Collection Period
=
Total Trade Debtors Sale per Day
(d) Creditors / Payable Turnover Ratio / Velocity
=
Net Credit Annual Purchase Avg.Trade Creditors
(e) Average Payment Period
=
Total Trade Creditos / Payable Avg.Daily Purchase
(f) Working Capital Turnover Ratio
=
Sales or Cost of Sales Net Working Capital
Analysis of Long-term Financial Position or Test of Solvency
(a) Debt Equity Ratio
=
Outsiders Funds Shareholders′ Funds
or
=
Outsiders′ Equities Internal Equities
(b) Funded Debt to Total Capitalization Ratio

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/5
=
Funded Debts Total Capitalization
× 100
(c) Ratio of Long term Debt to Shareholders, Funds (Debt Equity)
=
Long term Debts Shareholders′ Funds
(d) Proprietary or Equity Ratio
=
Shareholders Funds Total Assets
(e) Solvency Ratio
=
Total Liabilities to Outsiders Total Assets
(f) Fixed Assets Net Worth Ratio
=
Fixed Assets after Depreciation Shareholders′ Funds
(g) Fixed Assets Ratio or Fixed Assets to Long Term Funds
=
Fixed Assets after Depreciation Total long term Fund
(h) Ratio of Current Assets to Proprietary funds
=
Current Assets Shareholders′ Funds
(i) Debt-Service or Interest Coverage
=
Net Profit (before Int. & Taxes) Fixed Interest Charges
(j) Total Coverage or Fixed Charge Coverage
=
EBIT Total Fixed Charges
(k) Preference Dividend Coverage Ratio
=
Net Profit (before Int.& Tax) Preference Dividend
(l) Cash to debt-Service Ratio or Debt Cash Flow Coverage
=
CF
1 +
SFD 1 − Tax Rate
CF = Annual cash flow before Int. & Tax
SFD = Sinking fund appropriation on debt
Analysis of Profitability
(i) General Profitability:
(a) Gross Profit Ratio
=
Gross Profit Net Sale

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/5

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 5 pages?
Access Now
Unformatted Attachment Preview
Management Accounting - Useful Ratios. Short–term Financial Position or Test of Liquidity (a) Current Ratios = Current Assets Current Liabilities (b) Quick or Acid Test or Liquid Ratio = Liquid Assets Current Liabilities (c) Absolute Liquid Ratio = Absolute Liquid Assets Current Liabilities (d) Interval Measure = Liquid Assets Avg.Daily Operating Expenses Current Assets Movement (Asset Management Ratios) (a) Inventory /Stock Turnover Ratio = Cost of Goods Sold Avg.Inventory at Cost (b) Debtors or receivables Turnover Ratio/Velocity = Net Credit Annual Sale Avg.Trade Debtors (c) Average Collection Period = Total Trade Debtors Sale per Day (d) Creditors / Payable Turnover Ratio / Velocity = Net Credit Annual Purchase Avg.Trade Creditors (e) Average Payment Period = Total Trade Creditos / Payable Avg.Daily Purchase (f) Working Capital Turnover Ratio = Sales or Cost of Sales Net Working Capital Analysis of Long-term Financial Position or Test of Solvency (a) Debt Equity Ratio = Outsiders Funds Shareholders′ Funds or = Outsiders′ Equities Internal Equities (b) Funded Debt to Total Capitalization Ratio = Funded Debts Total Capitalization × 100 (c) Ratio of Long term Debt to Shareholders, Funds (Debt Equity) = Long term Debts Shareholders′ Funds (d) Proprietary or Equity Ratio = Shareholders Funds Total Assets (e) Solvency Ratio = Total Liabilities to Outsiders Total Assets (f) Fixed Assets Net Worth Ratio = Fixed Assets after Depreciation Shareholders′ Funds (g) Fixed ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
Studypool
4.7
Indeed
4.5
Sitejabber
4.4