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Management accounting useful ratios

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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

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=
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

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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 ...
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