Ratio Analysis

What is P/V (Profit Volume) Ratio? How to Calculate P/V Ratio?

The Profit Volume (P/V) Ratio is the measurement of the rate of change of profit due to a change in volume of sales. It is one of the important ratios for computing profitability as it indicates contribution earned with respect to sales. P/V ratio establishes the relationship between contribution and sales. It is importance for …

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What is Debt Service Coverage Ratio (DSCR)? How to Calculate Debt Service Coverage Ratio (DSCR)?

Debt Service Coverage Ratio (DSCR) is a coverage ratios, calculated for known the cash profit availability to repay the principal and interest. Essentially, DSCR is calculated when a company takes a loan from bank and other financial institutions. This ratio suggests the capability of cash profits to meet the repayment of the financial loan including …

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What is Earning per share (EPS)? How to Calculate EPS?

Earnings per share (EPS) is calculated as a company’s profit (Profit after Tax-Preferred dividend) divided by the outstanding shares. The resulting number serves as an indicator of a company’s profitability. It is common for a company to report EPS that is adjusted for extraordinary items and potential share dilution. The higher a company’s EPS, the …

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What is ROCE (Return on Capital Employed)? How to calculate ROCE (Return on Capital Employed)?

Return on capital employed (ROCE) ratio is computed by dividing the net income before interest and tax (EBIT) by capital employed. It measures the success of a business in generating satisfactory profit on capital invested. The ratio is expressed in percentage.Return on capital employed ratio measures the efficiency with which the investment made by shareholders …

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What is ROI (Return on Investment)? What is ROA (Return on Asset)? How to calculate ROI(Return on Investment)? How to calculate ROA (Return on Asset)?

Return on Investment (ROI) also known as Return on assets (ROA). This is a profitability ratio that helps determine how efficiently a company uses its assets. It is calculated divided to PAT (Profit after Tax) by Total Asset. In other words, ROA or ROI is an efficiency metric explaining how efficiently and effectively a company …

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What is Working Capital Turnover Ratio? How to calculate Working Capital Turnover Ratio?

Working Capital Turnover Ratio is used to determine the relationship between net sales (Total Sale – Sale Return) and working capital of a business. It shows the number of net sales generated for every single unit of working capital employed in the business. Gross Working Capital = Total Current Asset Net Working capital is calculated …

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What is Capital Gearing Ratio? How to calculate capital gearing ratio?

Capital gearing ratio is a useful tool to analyze the capital structure of a company or business and is computed by dividing the common stockholders’ funds by fixed cost bearing funds. Analyzing capital structure means measuring the relationship between the funds provided by common stockholders and the funds provided by those who receive a periodic …

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What is the Proprietary Ratio? How to calculate proprietary Ratio?

Proprietary ratio shows the total assets of a company which are financed by proprietors’ funds. This ratio is also known as equity ratio. It helps to determine the financial strength of a company & is useful for creditors to assess the ratio of shareholders’ funds employed out of total assets of the company. Proprietors’ funds …

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What is a Fixed Asset Ratio? How to Calculate fixed asset ratio?

Fixed asset ratio shows the relationship between a company’s long term funds with Fixed asset. Fixed Assets ratio is a type of solvency ratio which is calculated by dividing total fixed assets (net of depreciation) of a company with its long-term funds. It shows the amount of fixed assets being financed by long term funds. …

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