Ratio Formula Sheet
Profitability Ratios
(1) Return on Capital Employed = Profit before interest or operating profit x 100
Total non-current liabilities + Total Equity

(2) Return on Equity = Profit for Shareholder
Total Shareholder Equity

(3) Gross Profit Ratio = Gross profit
x 100
Net sales (Turnover or Revenue) Example:
Total sales = $520,000; Sales returns = $ 20,000; Cost of goods sold $400,000 Required: Calculate gross profit ratio.
Calculation:
Gross profit = [(520,000 – 20,000) – 400,000]
= 100,000
Gross Profit Ratio = (100,000 / 500,000) × 100
= 20%
Causes / reasons of increase or decrease in gross profit ratio: It should be observed that an increase in the GP ratio may be due to the following factors. 1. Increase in the selling price of goods sold without any corresponding increase in the cost of goods sold. 2. Decrease in cost of goods sold without corresponding decrease in selling price. 3. Omission of purchase invoices from accounts.

4. Under valuation of opening stock or overvaluation of closing stock. On the other hand, the decrease in the gross profit ratio may be due to the following factors. 1. Decrease in the selling price of goods, without corresponding decrease in the cost of goods sold. 2. Increase in the cost of goods sold without any increase in selling price. 3. Unfavorable purchasing or markup policies.

4. Inability of management to improve sales volume, or omission of sales. 5. Over valuation of opening stock or under valuation of closing stock (4) Net Profit Ratio = (Net profit / Net sales) × 100

Example:
Total sales = $520,000; Sales returns = $ 20,000; Net profit $40,000 Calculation:
Net sales = (520,000 – 20,000) = 500,000
Net Profit Ratio = [(40,000 / 500,000) × 100]
= 8%
Significance: NP ratio is used to measure the overall profitability and...

...RATIOS
I. Short-term Solvency OR
Liquidity:
1. Current Ratio
2. Quick OR Acid Test Ratio
3. Net Working Capital
4. Super Quick RatioFORMULA
Current Assets
Current Liabilities
Cash + marketable securities +
receivables (net)
Current Liabilities
Net Current Assets – Current
Liabilities
Cash + marketable securities
Current Liabilities
II. Activity OR Turnover OR
Efficiency Ratio:
1. Total Asset Turnover
2. Fixed Asset Turnover
3. Inventory Turnover
4. Debtor Turnover
5. Day Sales Outstanding
6. Raw Material Turnover
Cost of Goods Sold OR Net Sales
Avg Total Assets Avg Total Assets
Cost of Goods Sold
Average Fixed Assets
COGS
OR
Avg Inventory
Sales
Inventory
Net Credit Sales
Average Accounts Receivable
Accounts Receivable x No. of Days
Total Credit Sales
Cost of Material Used
Avg. Raw Material Inventory
7. Work in Process Turnover
Cost of Goods Manufactured
Avg. Work in Process Inventory
8. Finished Goods Inventory
Turnover
Cost of Goods Sold
Avg. Finished Goods Inventory
9. Current Assets Turnover
Cost of Goods Sold
Avg. Current Assets
10. Working Capital Turnover
11. Creditors Turnover
Cost of Goods Sold
Avg. Net Working Capital
Net Credit Purchases
Avg. Creditors + Avg. Bills Payable
III. Profitability:
(A) Related to Sales
1. Gross Profit Margin
2. Operating Profit Margin
3. Net Profit Margin
4....

...Patton-Fuller Ratio Computation
Shourn Henderson, Marilyn Lilly, Noralva Rodriguez
HCS/405
February 11, 2013
Dr. Ben Kukoyi
Patton-Fuller Ratio Computation
Introduction
This paper will address the ratio computations to Patton-Fuller Community Hospital taken from Audited and Unaudited Reports from 2008-2009. From 2008-2009 the existing assets reduced, but showed a growth in the hospital’s responsibilities. The hospital is presently making adequate revenue to cover the debts, which equals to no profit. Revenue needs to rise to avoid the debts of the hospital from increasing. Providing excellence service will in turn increase the quantity of patients seen eventually increasing revenue.
The Current Ratio decrease, due to assests, and an increase in liabilities, which indicates a 2.23% change in the ratio of assets to liabilities. The sharp drop in cash was offset by large rises in Net Accounts Receivable and Inventory, which are ordinarily unfavorable events also. However, if significant supplies were purchased (due to vendor discounts), the increase in Inventory could have been an astute business decision. The uncollected Accounts Receivables are troublesome.
1.The Quick Ratio decrease. The main difference between the Current Ratio and the Quick Ratio is 6.05:1 “inventory” in the Quick Ratio.
1.The Days Cash...

...Lowe’s Ratio Analysis
In the period from 1997-2001 Lowe’s showed a steady increase in working capital. It went from being $2110 million in 1997 to $4920 million in 2001. This shows the company had good amount of liquid assets to conduct and build its business. Lowe’s fixed assets went from $3005 million in 1997 to $8653 million in 2001. Total capital is found by taking working capital and adding it to fixed assets. Lowe’s total capital increased from $5219 million in 1997 to $13736 million in 2001. The company’s tax rate remained at 37.5% from 1997 to 2001. NOPAT means net operating profit after taxes. It is a measure of operating efficiency. Lowe’s NOPAT increased from $390 million in 1997 to $1123.75 million in 2001. This shows that they were operating more efficiently in each year.
There are two profitability ratios that are important, they are return on capital and return on equity. Return on capital measures the return that an investment generates for stock and bondholders. It indicates how good a company is at turning capital into profits. Lowe’s return on capital increased from 7.47% in 1997 to 8.18% in 2001. The second profitability measure is return on equity. It measures how profitable a company is by comparing net income to average shareholders’ equity. It also shows how efficient or inefficient a company is at utilizing its equity. It increased from 13.73% in 1997 to 15.34% in 2001. So Lowe’s was making a profit.
There are 6...

...Profitablity Ratio Analysis
This analysis ratio based on FAME report and annual report of Thortons (PLC) from 2007 to 2010.
1. Gross Profit Margin
During period 2007-2010, Thorntons was achieved the highest gross profit margin in 2007. It was increased the sales/revenue 5.3% (from ₤ 176.60m to 186.00 m). In 2008 the sales was increased 11.9% (from ₤ 186.00m to 208.12 m) however the gross profit margin was decreased due to the high cost of good sales compare to previous year which was increased 19.7%. In financial report 2009, the gross profit was declined from 105.105 m to 104.969m and declined of gross profit margin from 50.5% to 48.87$. In 2010, there was increased in gross profit margin though the sales was decreased from the previous year.
In terms of performance against its competitors in similar industry, the performance of Thortons is relatively higher during period 2007-2010 (Figure.1). The performance of other competitors, Dunhills, only could achieve the 42.16% in 2010. Compare to its competitors , it was indicated that Thorntons has high gross profit margin, meaning that Thortons has high production efficiency. Having High gross profit margin, Thorntons could pay its operating expense, tax , employee benefits etc.
2. Operating Profit Margin
In view of its Operating Profit Margin, Thorntons performance was increased in two consecutive years from 2007 to 2008 with ratio 3.81 % and 4.03%....

...
Ratio Analysis
Cynthia Nelson
HCS/571
September 2 2013
Joseph Rudd
Ratio Analysis
Financial ratio analysis is the calculation and comparison of ratios pulled from the information in a company’s financial statements (Cleverly & Song, 2011). The financial report is used by organization to determine the financial health and stability of an organization. The ratios analysis data are found on the business Profit and Loss Statement and the balance sheet (Loth, 2013). These financial documents provide data for a specific time usually fiscal year (Cleverly & Song, 2011). The ratios are then obtained through formula divided into categories that address the different focus areas of management (Suarez & Lesneski, 2011). The company WW Enterprises uses the four major areas Liquidity, Solvency, Profitability; and Efficiency that measure how well the organization is using its resources (Loth, 2013).
Liquidity ratio is a quick look at organizations ability to meet current financial obligations (Staff, 2013). The Liquidity ratio data for WW Enterprise includes the current ratio, the quick ratio and the operating cash flow ratio (Loth, 2013)
LIQUIDITY RATIOS.
Current Assets/Current Liabilities
=52,100/30834=1.725(1.73)
The ratio results provide a quick assessment of the...

...000 |
Cumulative Cash Balance | 69.600 | 77.800 | 101.200 |
Repayment | 5.400 | 2.800 | 2600 |
Cumulative Loan Balance | 5.400 | 2.600 | 0 |
Ending Cash Balance | $75.000 | $75.000 | $98.600 |
Problem 25 / Page 89
Profitability Ratios | Johns Corp | Smith Corp |
Profit Margin | 7.4% | 5.25% |
Return On Assets | 18.5% | 12% |
Return on Equity | 29% | 34% |
Assets Utilization Ratios | | |
Receivable Turnover | 15.6 | 14.29 |
Average Collection Period | 23 T | 25 T |
Inventory Turnover | 25 | 13.3 |
Fixed Assets Turnover | 3.57 | 4 |
Total Assets Turnover | 2.5 | 2.3 |
Liquidity Ratios | | |
Current Ratio | 0.83 | 0.65 |
Quick Ratio | 1.0 | 1.5 |
Debt Utilization Ratios | | |
Debt To Total Assets | 36% | 65% |
interest Earned | 24 | 6 |
Debt to Equity | 0.56 | 1.86 |
In analyzing the Profitability Ratios, we are able to note that john’s Corp shows higher profit margin than Smith by 2.10% which means good cost control, it measures of how many percent if a dollar earned, that the johns Corp get to keep as a profit. And its return on assets is higher by 6.5% and that indicates how many dollars of Johns earnings result from each dollar of assets the company controls. Return on Assets ratio gives an idea of how efficient management is at using its assets to generate profit.
Smith Corporation analysis indicate...

...Sales OR Net income/Sales
Net Profit Margin is a ratio of profitability that measures how much out of every dollar of sales a company actually keeps in earnings. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors.
43938/528369 = 8.32%
This is above industry average of 7.23%.
Tootsie Roll’s profit margin is 8.32%, meaning the company has a net income of $.0832 for each dollar of sales.
Return on Assets:
Net Income/Total Assets
ROA is how much income is earned on each dollar invested. It will always be smallest compared to ROE & ROI. ROA is an indicator of how profitable a company is relative to its total assets, or how efficient management is at using its assets to generate earnings.
43938/857856 = 5.12%
This is below industry average of 8.15%.
Tootsie Roll’s ROA is 5.12% whereas the industry average is 8.15% meaning that Tootsie Roll needs to teach management how to make better choices to allocate its resources.
Return on Equity:
Net Income/Equity (total assets – total liabilities)
ROE is the amount of net income returned as a percentage of shareholders equity. It measures a company’s profitability by revealing how much profit a company generates with the money shareholders have invested.
When compared to ROI (return on investment) ROE cannot be below ROI; however, they can be equal if no long term debt exists. If these ratios are apparently wide...

...FORMULAS
All four of these formulas use the following terms: inequality, equivalent, and interval. Formula numbers one, two, and three use the term compound inequality. Formula number four uses the term infinity. In these formulas I am going to figure out the weight amounts, better known as (w). Formulas are definitely something that I have had to re-teach myself. They are not super complicated; but, at first glance, it is definitely confusing. Formulas are definitely not as complicated once they are broke down into a better understanding.
#1. 17 < 703w/4,225 < 22 My height to the second power will be plugged in to (H) as the
amount of 4,225.
17*4225 < 703w < 22*4225 I will take 4,225 and set it up to multiply times 17 and 22.
71,825 < 703w < 92,950 Multiplied.
71,825/703 < 703w/703 < 92,950/703 Now, I will take all three components and divide by
703. 703w/703 will cancel out 703 and leave the (w).
Answer: 102.03 < w < 132.22 People that weigh between 102.03...