RATIO ANALYSIS FORMULAS THEORIES比率分析公式.pdf

RATIO ANALYSIS FORMULAS + THEORIES A) Cash Position Ratio : - 1) Absolute Cash Ratio = Cash Reservoir Current Liabilities 2) Cash Position to Total asset Ratio = Cash Reservoir * 100 (Measure liquid layer of assets) Total Assets 3) Interval measure = Cash Reservoir (ability of cash reservoir to meet cash expenses) Average daily cash expenses ( Answer in days) Notes : - • Cash Reservoir = Cash in hand + Bank + Marketable Non trade investment at market value. • Current liabilities = Creditors + Bills Payable + Outstanding Expenses + Provision for tax (Net of advance tax) + Proposed dividend + Other provisions. • Total assets = Total in asset side – Miscellaneous expenses – Preliminary expenses + Any increase in value of marketable non trading Investments. • Average cash expenses =Total expenses in debit side of P L a/c – Non cash item such as depreciation, goodwill, preliminary expenses written off, loss on sale of investments, fixed assets written off + advance tax (Ignore provision for tax) . The net amount is divided by 365 to arrive average expenses. Remarks : - In Comparison • When absolute cash ratio is lower then current liability is higher • When cash position to Total Asset ratio is lower then the total asset is relatively higher. • When cash interval is lower the company maintain low cash position. It is not good to maintain too low cash position or too high cash position. B) Liquidity Ratio : - 1) Current ratio = Current asset Current Liability 2) Quick ratio or Acid Test ratio =