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Ratio Analysis - Profitability
 
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Profitability ratios look at the returns earned by a business both in terms of its trading activities (sales revenue) and also how much is invested in earning those returns (capital employed). This revision video introduces the four main profitability ratios.
Views: 86055 tutor2u
Financial Statement Analysis #2: Ratio Analysis - Liquidity (Short Term Solvency)
 
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http://www.subjectmoney.com http://www.subjectmoney.com/articledisplay.php?title=Financial%20Statement%20Analysis%20and%20Ratios In this financial statement analysis tutorial we are covering liquidity measures or short term solvency ratios. Here you will learn about the current ratio, the quick ratio (acid test) and the cash ratio. Short-term solvency measures are used to determine whether or not a company would be able to pay off its short-term liabilities if they were to come due within the near future. Please don't forget to subscribe, rate and share our videos. Please also visit our website at http://www.subjectmoney.com and http://www.excelfornoobs.com https://www.youtube.com/user/Subjectmoney https://www.youtube.com/watch?v=G8v9hF0k3gI
Views: 75455 Subjectmoney
Finance: Liquidity Ratios Explained
 
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Learn more about liquidity ratios here on the tutor2u website: https://www.tutor2u.net/business/reference?q=liquidity+ratio In this short revision video, Jim Riley from tutor2u Business introduces the concept of liquidity ratios and explains how to calculate and interpret the two main ratios: the current ratio and acid-test ratio.
Views: 129664 tutor2u
Ratio Analysis. Liquidity ratios, solvency ratios, profitability ratios.
 
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I have discussed about liquidity, profitability, solvency and and activity ratios in this video
Views: 36489 Amjad Niaz
Ratios Analysis - Interpretation - Profitability Ratios - Liquidity Ratios  | English
 
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Ratios Analysis - Interpretation Video Lecture in English by Sir ARD For More Updates follow me on: Group: http://www.facebook.com/groups/Dharolia Profile: http://www.facebook.com/ARDharolia Page: http://www.facebook.com/Dharolia Practice Accounting Topical MCQs P1 at: http://practice.ard.com.pk Subscribe the Channel and press the bell icon to never miss a lecture from Sir ARD. SHARE if you find it helpful profitability ratios liquidity ratios solvency ratios ratios analysis how to calculate ratios interpretation of accounts financial ratios introduction to ratios analysis interpretation
Views: 478 Ahmed Raza Dharolia
Liquidity Ratio Analysis | Financial Accounting | CPA Exam FAR | Ch 15 P 4
 
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Current ratio, ratio analysis. liquidity ratio, profitability ratio, market ratio, liquidity ratio, solvency ratio, market prospects ratio, working capital, trend analysis, common-size financial statements, acid test ratio, account receivable turnover, inventory turnover, asset turnover, gross profit, debt ratio, equity ratio, times interest earned, dividend yield. pe ratio, financial statement analysis, vertical analysis, horizontal analysis,
Liquidity Ratios & Solvency Ratios - Explained in Hindi
 
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Liquidity ratios & solvency ratios meaning explained in hindi. What is liquidity, solvency, insolvency? Liquidity risk and solvency risk should be analyzed for any company or individual. For a company, we analyse liquidity ratios - current ratio, quick ratio, cash ratio and solvency ratios - debt ratio, debt to equity ratio, interest coverage ratio, debt service coverage ratio (dscr) etc. Related Videos: Current Ratio: https://youtu.be/STR_aUzAxpI Quick Ratio: https://youtu.be/QdPzteTZ1Dk Cash Ratio : https://youtu.be/-G5Pco2xnBk Current Assets & Current Liabilities: https://youtu.be/6_ZPGktZIts Assets, Liabilities & Equity: https://youtu.be/4BhpDCAL62M लिक्विडिटी रेश्यो और सॉल्वेंसी रेश्यो का मतलब इस वीडियो में हिंदी में समझाया गया है। लिक्विडिटी, सॉल्वेंसी, इन्सॉल्वेंसी क्या है? किसी भी कंपनी या व्यक्ति के लिए लिक्विडिटी रिस्क और साल्वेंसी रिस्क का एनालिसिस किया जाना चाहिए। कंपनी के लिए, हम लिक्विडिटी रेश्यो का विश्लेषण करते हैं - करंट रेश्यो, क्विक रेश्यो, कैश रेश्यो, और सॉल्वेंसी रेश्यो - डेब्ट रेश्यो, डेब्ट टू इक्विटी रेश्यो, इंटरेस्ट कवरेज रेश्यो, डेब्ट सर्विस कवरेज रेश्यो (dscr) आदि। Share this Video: https://youtu.be/ZMSW9BYb_Yo Subscribe To Our Channel and Get More Property, Real Estate and Finance Tips: https://www.youtube.com/channel/UCsNxHPbaCWL1tKw2hxGQD6g If you want to become an Expert Real Estate investor, please visit our website https://assetyogi.com now and Subscribe to our newsletter. In this video, we have explained: What are the liquidity ratios and solvency ratios? What is the meaning of liquidity risk and solvency risk? How to analyze the liquidity risk and solvency risk for any company or individual? What is the meaning of insolvent company? What is the differences between liquidity, solvency, and insolvency? How to know if a company or individual is bankrupt? What is the formula for liquidity ratio calculation and solvency ratio calculation? Analyzing liquidity ratios and solvency ratios of a company can help us to understand the risks of bankruptcy. Liquidity ratios such as current ratio, quick ratio, cash ratio help us to understand the liquidity risk status and solvency ratios such as debt ratio, debt service coverage ratio (dscr), interest coverage ratio can be helpful to analyze the solvency risks. Make sure to Like and Share this video. Other Great Resources AssetYogi – http://assetyogi.com/ Follow Us: Instagram - http://instagram.com/assetyogi Twitter - http://twitter.com/assetyogi Linkedin - http://www.linkedin.com/company/asset-yogi Facebook – https://www.facebook.com/assetyogi Pinterest - http://pinterest.com/assetyogi/ Google Plus – https://plus.google.com/+assetyogi-ay Hope you liked this video in Hindi on “Liquidity Ratios & Solvency Ratios”.
Views: 26750 Asset Yogi
Financial Ratio Analysis| (Liquidity Ratios)
 
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#financialratios #financialratioanalysis #liquidityratios
Ratio Analysis: Liquidity Ratios (Part - 1)
 
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What is liquidity?
Views: 184 Rakesh Kabra
#1 Ratio Analysis [Liquidity & Activity Ratios] ~ Concept behind formation of a Formula
 
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#RatioAnalysis #LiquidityRatios #ActivityRatios Described the concept, reason and logic behind formation of different formulas of analysis of financial statements. I have discussed the core concept of contents used in the following formulas: Current Ratio, Quick Ratio, Fixed Assets Turnover Ratio, Current Assets Turnover Ratio and Working Capital Turnover Ratio, Further discussed concept of Current Assets, Quick Assets so that student need not to remember formula to solve any question Connect on Facebook : https://www.facebook.com/ca.naresh.aggarwal Download Assignments: https://drive.google.com/drive/folders/0BzfDYffb228JNW9WdVJyQlQ2eHc?usp=sharing
Views: 184110 CA. Naresh Aggarwal
Understanding Liquidity Ratios
 
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This BeeBusinessBee video focuses on the topic of liquidity ratios. It looks that the concept of conducting ratio analysis from a set of financial accounts, specifically what would be required if you were being asked to assess the liquidity of an organisation? This video forms part of a series of videos on this topic and has been designed with questions that will test your knowledge and understanding. It is important to remember to pause the video when you reach a series of questions. Remember that additional resources and materials can be found online at; www.beebusinessbee.co.uk
Views: 5115 Bee Business Bee
3 Minutes! Financial Ratios and Financial Ratio Analysis Explained (Quick Overview)
 
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OMG wow! So easy clicked here http://mbabullshit.com/ for Financial Ratio Analysis Explained Financial Ratio Analysis Explained in 3 minutes Sometimes it's not enough to simply say a company is in "good or bad" health... To make it easier to compare a company's health with other companies, we have to put numbers on this health, so that we can compare these numbers with the numbers of other companies... So now... how do we use numbers to assess company health? http://www.youtube.com/watch?v=TZZFBkbC2lA This is where Financial Ratios come in... Very common types of financial ratios are Liquidity Ratios, Profitability Ratios, and Leverage Ratios. Liquidity Ratios can tell us how easily a company can pay its debts... so that the company doesn't get eaten up by banks or other creditors. An example of this is the Current Ratio... This tells us how much of your company's stuff can be easily changed into cash within the next 12 months so that it can pay debts which need to be paid also within 12 months. The higher your current ratio is, the less risky a situation your company is in. Now moving on... Profitability Ratios can tell us how good a company is at making money. An example of this is the Profit Margin Ratio. This tells us how much profit your company earns compared to your company's sales. Normally, a higher number is better; because you want to earn more profit for every $1 of sales that you get. And finally, what about Leverage Ratios? These can tell us how much debt the company is using to make the company run and stay alive. An example of this is the simple Debt Ratio. This tells us how much % of a company's assets are paid for by debt. Normally, a company is considered "safer" when the debt ratio is low. Note that this was just a very simple overview. There are a lot more financial ratios & many different ways of using them; plus a lot of problems and disadvantages in using them as well. Would you like to SUPER easily learn more about many financial ratios with even deeper analysis & detail? Check out my FREE videos at MBAbullshit.com See ya there!
Views: 1287295 MBAbullshitDotCom
Liquidity Ratios
 
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Introduction to Managerial Finance: Liquidity Ratios
Views: 10221 LearningSims
Profitability ratio analysis
 
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A brief introduction into three basic profitability ratios: 1. Gross Profit Ratio 2. Net Profit Ratio 3. Rate of Return on Equity Ratio More videos, tasks, quizzes, handouts and other resources can be found at https://meyerflippedlearning.com/#!/home
Views: 15091 Bernd Meyer
Basic ratios for profitability, liquidity and efficiency
 
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This screncast demonstrates the calculation of eight basic ratios for assessing an entity's financial performance.
Views: 2374 Luke Fannon
Financial Ratios -- Liquidity, Asset Management and Debt Management
 
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This video walks through the calculation and interpretation of the current, quick, inventory turnover, days sales outstanding, fixed asset turnover, total asset turnover, total debt to total asset, times interest earned and cash coverage ratios.
Views: 130085 Kevin Bracker
it;s only 9 minutes - Meaning Types of ratio and advantages
 
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Want to compare or find a trend you need to understand Financial Ratios. Financial ratio analysis is a useful tool for users of financial statement. The video beautifully explains what is the meaning of the ratio, various advantages of using a ratio and highlighting different types of ratios - L - Liquidity ratio S- Solvency ratio P - Profitability ratio A- Activity ratio (Please do share your feedback).
Views: 122418 financeschoolin
Current Ratio
 
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This video explains how to calculate and interpret the Current Ratio, a common method of evaluating a firm's short-term liquidity. The video provides of an example of how to compute the Current Ratio for two firms and interpret the results. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 49126 Edspira
Financial Ratios & Analysis - Explained in Hindi
 
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An introduction to Financial Ratio Analysis in hindi. Financial ratios like profitability ratios, liquidity ratios, solvency ratios (leverage or debt ratios), activity ratios (efficiency ratios) and valuation or market ratios are analyzed before making an investment decision or to judge the financial health of a company. Few examples are discussed for each type of ratio for eg. profit margin, current ratio, debt ratio, inventory turnover ratio, earnings per share (EPS) and P/E ratio. Related Videos: Profitability Ratios - Gross, Net, Operating Profit Margin : https://youtu.be/pHgiuO2ZYoU Liquidity Ratios & Solvency Ratios: https://youtu.be/ZMSW9BYb_Yo Return on Investment (ROI): https://youtu.be/ij7y5e2MVG4 Earnings Per Share (EPS): https://youtu.be/SDXp64flfJI इस वीडियो में जानिए फाइनेंसियल रेश्यो एनालिसिस का हिंदी में परिचय। फाइनेंसियल रेश्यो जैसे की प्रोफिटेबिलिटी रेश्यो, लिक्विडिटी रेश्यो, सॉल्वेंसी रेश्यो (लिवरेज या डेब्ट रेश्यो), एक्टिविटी रेश्यो (एफिशिएंसी रेश्यो) और वैल्यूएशन या मार्केट रेश्यो को एनालाइज़ किया जाता है कोई भी निवेश का निर्णय लेने से पहले और किसी कंपनी के फाइनैंशल हेल्थ को जज करने के लिए भी किया जाता है। हर एक प्रकार के रेश्यो के लिए कुछ उदाहरणों पर चर्चा की गयी है जैसे: प्रॉफिट मार्जिन, करंट रेश्यो, डेब्ट रेश्यो, इन्वेंटरी टर्नओवर रेश्यो, अर्निंग्स पर शेयर (EPS) और P/E रेश्यो। Share this Video: https://youtu.be/CZscpOND3Vs Subscribe To Our Channel and Get More Property and Real Estate Tips: https://www.youtube.com/channel/UCsNxHPbaCWL1tKw2hxGQD6g If you want to become an Expert Real Estate investor, please visit our website https://assetyogi.com now and Subscribe to our newsletter. In this video, we have explained: What are the financial ratios? How financial ratio helps you to understand the financial health of a company? What is the concept of financial ratios? How to analyze a company's financial health using financial ratios? How many types of financial ratios are used for the financial status of a company? What is the meaning of different financial ratios? How to calculate different financial ratio? How to do financial ratio analysis? What is the concept of financial ratio analysis? Which financial ratios can be used to analyze the financial status of a company? What is the basic concept of profitability ratios, liquidity ratios, solvency ratios, activity ratios and market ratios? Make sure to Like and Share this video. Other Great Resources AssetYogi – http://assetyogi.com/ Follow Us: Twitter - http://twitter.com/assetyogi Facebook – https://www.facebook.com/assetyogi Instagram - http://instagram.com/assetyogi Pinterest - http://pinterest.com/assetyogi/ Linkedin - http://www.linkedin.com/company/asset-yogi Google Plus – https://plus.google.com/+assetyogi-ay Hope you liked this video in Hindi on “Financial Ratios & Analysis”.
Views: 44999 Asset Yogi
CMA Exam: Liquidity & Solvency Ratios for CMAs (Wiley CMAexcel Free Lesson)
 
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In this free video lecture from the Wiley CMAexcel CMA Review Course, Dallon Christensen, CMA, CPA/CIPTA, discusses how investors use ratios to make decisions about the health of a business. This video goes into detail about how liquidity and solvency ratios are easier to chart and graph over time, revealing trends to inform decisions. A separate lesson is dedicated to profitability ratios. For more, register for a free 14-day trial of Wiley CMAexcel http://ow.ly/KrMp3
Views: 11913 Wiley
#2 Ratio Analysis:- Liquid Ratio/Quick Ratio/Asset Test Ratio with Numerical by JOLLY Coaching
 
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Ratio Analysis: This video include LIQUIDITY RATIO/LIQUID RATIO with solved numerical examples which will help you to solve your problems. Link for 1st part : https://www.youtube.com/edit?o=U&video_id=mqHx3RMLfRY This video provide you the solution of 4 practical examples starting from easy to difficult questions. Liquid ratio is also called as quick ratio or acid test ratio. I hope this video will help you to solve your practical questions. Thanks. JOLLY Coaching Ratio analysis in Hindu Liquid ratio in hindi RATIO CHAPTER IN HINDI formulas for ratio analysis chapter chapter ratio analysis in hindi in hindi solvency ratio solvency ration in hindi ratio analysis chapter 12th class ratio analysis chapter chapter ratio analysis chapter ratio analysis in hindi in hindi ratio analysis current ratio how to calculate current ratio quick asset ratio how to calculate quick asset ratio liquid asset ratio liquid asset test ratio asset test ratio liquid ratio formula formula for ratio analysis ratio analysis chapter ratio analysis in hindi in hindi ratio analysis cbse pseb accounts 12th accounting 12th class accounting in hindi ratio analysis chapter all formulas for ratio analysis how to solve ratio analysis questions easy way for ratio analysis formulas
Views: 13579 JOLLY Coaching
Ratio Analysis - Limitations of Ratios
 
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Whilst widely-used and understood, there are several limitations with using ratio analysis. This revision video explores these limitations.
Views: 22531 tutor2u
ratio analysis of financial statements in hindi| liquidity ratios| solvency ratios| leverage ratio
 
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In this video we have discussed ratio analysis of financial statements in hindi.We have discussed the categorization of different ratios and their types such as liquidity ratio : Current ratio and quick ratio, leverage ratio, debt equity ratio, debt service coverage ratio, return on capital employed roce, return on assets, return on equity etc. If Found our video helpful to you anyway, Then don't forget to like the video. Kindly Subscribe our channel for to get the notification for our latest videos Subscribe Link : https://goo.gl/M51wPX -----Like ------ Share -------- Comment ------- Subscribe -------------------------- Follow us on Facebook : https://www.facebook.com/bankingsutra/ Follow us on Twitter : https://twitter.com/banking_sutra Follow us on Google plus : https://plus.google.com/108611863544253921936 Follow us on Whatsapp : +918336937153
Views: 70727 BANKING SUTRA
Profitability Ratio Analysis: Financial Ratio Analysis Explained
 
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Profitability Ratio Analysis: Financial Ratio Analysis Explained Support AccoFina's Patreon if you are a Fan or Believer in my work, https://patreon.com/accofina Time Markers: 1) The Profit Margin 1:17 2) The Gross Profit Margin 5:47 3) The Return on Assets 14:28 4) The Return on Equity 21:47 5) Different ways to conduct ratio analysis 27:56 6) Key ideas with all ratio analysis 29:06 1) THE PROFIT MARGIN Tells us how much profit is generated from sales. Percentage of sales revenue that ends up as profit Good indicator of cost control and/or pricing power. Profit Margin Formula: Profit Margin = Net Income / Sales Revenue Example Where do we find the Required Inputs? Net Income: From the Income Statement Sales Revenue: From the Income Statement How to Interpret Changes in the Ratio: Expenses have changed in relation to sales... * Management is effective with cost control * Economies of scale are being utilised. Sales Revenue has changed in relation to expenses... * Change in pricing power (bargaining position with consumers) * Change in state of the economy and aggregate demand 2) THE GROSS PROFIT MARGIN (Very important for resellers and manufacturers) Profit between cost of inventory and sales price. How much sales revenue left to cover profit and all other expenses. Gross Profit Margin Formula: Gross Profit Margin = (Sales Revenue - Cost of Goods Sold) / Sales Revenue Where do we find the Required Inputs? Sales Revenue: From the Income Statement Cost of Goods Sold: From the Income Statement How to Interpret Changes in the Ratio: Sales Revenue has changed in relation to cost of goods sold... * Change in pricing power (bargaining position with consumers) * Change in product or aggregate demand (without a flow through the supply chain yet) * Market competitive position and pressures Cost of Goods Sold has changed in relation to sales revenue... * Power within the supply chain * Change in supplier or production efficiency Changes in prices of particular commodity inputs 3) RETURN ON ASSETS Return generated by the assets for those who funded the assets. Insight into success of management in income generating asset allocation and utilisation. Return on Assets Formula: Return on Assets = (Income beforeTax + Interest Expense) / ((Assets at Start of Period + Assets at End of Period) / 2) Where do we find the Required Inputs? Income before Tax: From the Income Statement Interest Expense: From the Income Statement Assets at Start of Period: From the Previous Balance Sheet Assets at End of Period: From the Current Balance Sheet How to Interpret Changes in the Ratio: Profitability has changed in relation to the level of assets... * Management is getting ‘more from less’ in regards to assets * Management has made good asset allocation decisions in terms of revenue * Management has good control of costs in relation to expenses Previously mentioned reasons: e.g. economy, market power, competitive position Level of assets have changed in relation to profitability... * Assets may have suddenly increased through large, recent * CapEx Assets may not be being replaced or replenished at the same rate * Particular choice of depreciation/amortisation policies 4) RETURN ON EQUITY Return generated for the owners of the business, the common stockholders. Insight into success of any leverage used (when comparing to return on assets). Return on Equity Formula: Return on Equity = (Net Income - Preference Dividends) / ((Common Stockholder Equity at Start of Period + Common Stockholder Equity at End of Period) / 2) Where do we find the Required Inputs? Net Income: From the Income Statement Preference Dividends: From the Income Statement or Investor Relations Equity at Start of Period: From the Previous Balance Sheet Equity at End of Period: From the Current Balance Sheet How to Interpret Changes in the Ratio: Profitability has changed in relation to the level of common stockholder equity... * Management performance is changing in the eyes of, and on behalf of, the owners/employers * Previously mentioned reasons: e.g. economy, market power, competitive position, cost control, asset utilisation Common Stockholder Equity has changed in relation to profitability... * The level of liabilities have changed (and thus equity) * A stock issue or stock buyback (i.e. equity levels have changed) Subscribe to the Channel: https://goo.gl/84Sfeg Or just check out the Channel Page: https://goo.gl/yTj9Bs Most Popular YouTube Video: https://goo.gl/Jbv685 Latest YouTube Upload: https://goo.gl/wDM83Y 1) Website http://www.accofina.com 2) Amazon Author Page: http://www.amazon.com/author/axeltracy 3) Udemy Instructor Page https://www.udemy.com/u/axeltracy/ 4) Twitter http://www.twitter.com/accofina 5) Google+ http://plus.google.com/+accofina 6) Instagram https://www.instagram.com/axel_accofina/ 7) Facebook Page https://www.facebook.com/AccoFina.Page #Accounting #FinancialEducation #FundamentalAnalysis
Views: 53584 AccoFina
CMA بالعربي - Part2 - Sec. A Financial Analysis - Liquidity Ratios (3)
 
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CMA بالعربي - Part2 - Sec. A Financial Analysis (2) Facebook:- https://www.facebook.com/CMAEducation
Views: 25035 CMAEducation
Liquidity & Solvency Ratio Analysis-Current ratio, Quick ratio & Cash conversion cycle days
 
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Liquidity & Solvency Ratios In this video we are going to discuss about liquidity & solvency ratios. Liquidity ratios measure the company’s ability to meet short term obligations (arising over the next 1 yr.) and solvency ratios measure the company’s ability to meet the long term debt obligations (Greater than 1yr) The important liquidity ratios discussed in this video are Current ratio Quick ratios Cash conversion cycle Current ratio = Is calculated as Current assets/Current liabilities The current ratio for star Moto corp. for yr. ending 31-03-2017 was = 75000/40000 = 1.87 It means that star Moto corp. has more than enough current assets to meet its short term obligations/current liabilities. Current ratio of 1 indicates that the amount of current assets = current liabilities Companies that have a current ratio greater 1 are in a comfortable position and companies which have a current ratio of less than 1 do not have enough current assets to meet their current liabilities, they need to generate or raise money to meet their short term obligations. Quick Ratio or Acid test ratio = Is calculated as Cash + Current investments + Receivables/current liabilities The Quick ratio for Star Moto corp. for 31-03-2017 was = 68000/40000 = 1.7 This is a more stringent measure of liquidity when compared to the current ratio. Inventories may not be easily convertible to cash and companies may not be able to sell its inventory quickly. Hence inventories are not taken into a/c while calculating this ratio Cash conversion cycle is calculated as CCC = Inventory days + receivable days - payable days The CCC is not a ratio, because it is expressed in no. of days. It signifies the no. of days it takes a company to convert inventories into working capital and subsequently collect cash The CCC of Star Motocorp for 31-03-2017 is. = 9 + 14 – 54 = -31 days. Star Motocorp had a negative cash conversion cycle. This means that the company is selling its inventory & collecting cash from customers faster than it is paying its suppliers for Raw materials. The important solvency ratios discussed in this video are Debt / equity Interest coverage The debt equity ratio measures the amount of debt a company has relative to its equity. Debt ratio of 1 signifies the company has an equal amount of debt & equity. A higher ratio signifies that a company has higher levels of debt and investors need to have a close watch on these companies. The debt /equity ratio of Star Motocorp for yr ending 31-03-2017 Debt/Equity = 5000/100000 = 0.05 The company has negligible debt and in is a very comfortable position Interest coverage ratio = Is calculated as EBIT/Interest payments This ratio measures the no of times the company can make its interest payments with its current operating earnings. A higher interest coverage ratio signifies that the company can comfortably service its interest payments from EBIT/ Operating earnings. The interest coverage ratio for Star Motocorp for 31-03-2017 was. 45000/5000= 9 The company is in a very comfortable position on this front To conclude, liquidity & solvency ratios of the company need to be studied over a period of time and compared with other players in the industry to check if its performance is improving or deteriorating in meeting its long term and short term obligations.
Views: 204 Fintapp
Financial Ratio Analysis | Introduction to Corporate Finance | CPA Exam BEC | CMA Exam | Chp 3 p 3
 
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nother way of avoiding the problems involved in comparing companies of different sizes is to calculate and compare financial ratios. Such ratios are ways of comparing and investigating the relationships between different pieces of financial information. Using ratios eliminates the size problem because the size effectively divides out. We’re then left with percentages, multiples, or time periods. There is a problem in discussing financial ratios. Because a ratio is simply one number divided by another, and because there are so many accounting numbers out there, we could examine a huge number of possible ratios. Everybody has a favorite. We will restrict ourselves to a representative sampling. In this section, we only want to introduce you to some commonly used financial ratios. These are not necessarily the ones we think are the best. In fact, some of them may strike you as illogical or not as useful as some alternatives. If they do, don’t be concerned. As a financial analyst, you can always decide how to compute your own ratios. One of the best known and most widely used ratios is the current ratio. As you might guess, the current ratio is defined as follows: Current assets divided by current liabilities. Inventory is often the least liquid current asset. It’s also the one for which the book values are least reliable as measures of market value because the quality of the inventory isn’t considered. Some of the inventory may later turn out to be damaged, obsolete, or lost. More to the point, relatively large inventories are often a sign of short-term trouble. The firm may have overestimated sales and overbought or overproduced as a result. In this case, the firm may have a substantial portion of its liquidity tied up in slow-moving inventory. To further evaluate liquidity, the quick, or acid-test, ratio is computed just like the current ratio, except inventory is omitted. LONG-TERM SOLVENCY MEASURES Long-term solvency ratios are intended to address the firm’s long-term ability to meet its obligations, or, more generally, its financial leverage. These are sometimes called financial leverage ratios or just leverage ratios. The total debt ratio takes into account all debts of all maturities to all creditors.
Ratio Analysis Liquidity ratios PART 1
 
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this video is all about Ratio analysis and different types of ratios liquidity ratio,turnover ratio,solvency ratio and profitability ratio In this video you will get to know that how much the share market can gives returns the four companies that can make you a millionaire if you invested in that before 15 to 20 yrs ago and plz subscribe my video for all videos related to share market,mutual fund,stocks and other investments : Business studies CLASS 12: https://www.youtube.com/playlist?list=PLz7AJVVRLYcQvZUYxAxJL8X8TTlPbsbpy : STRATEGIC MANAGEMENT CA IPCC INTER: https://www.youtube.com/playlist?list=PLz7AJVVRLYcTGnUe-Zt3IhnN1hqfxTI99 : Enterprise imformation system ca intermediate: https://www.youtube.com/playlist?list=PLz7AJVVRLYcTiL3wACSrJo6OVI6GO7FVW : Financial management ca ipcc inter: https://www.youtube.com/playlist?list=PLz7AJVVRLYcT_cu1ZDPwz7kWLMvGi9WzW
Views: 71 Ashish Varwani
Liquidity ratios
 
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Mark explains the importance of liquidity ratios
Views: 10177 gcupdates
Liquidity and Solvency Ratios
 
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In this video I show you a spreadsheet with Financial Statements and we calculate and discuss financial ratios. This is from my course on Udemy called Startups: A Guide to Entrepreneurship. In the course you can download the spreadsheet in order to get better insight into the calculations and how financial statements interconnect and flow. Horizontal and Vertical Analysis Horizontal analysis compares financial information over time, typically from past financial statements such as the income statement. When comparing this past information we look for variations of particular line items such as higher or lower earnings, sales revenues, or particular expenses. Horizontal analysis is used to look for trends that can be extrapolated in order to predict future performance. Vertical analysis is a proportional analysis performed on financial statements. It is ratio analysis. Line items of interest on the financial statement are listed as a percentage of another line item. For example, on an income statement each line item will be listed as a percentage of Sales. Financial Ratios Financial ratios are powerful tools used to assess company upside, downside, and risk. There are four main categories of ratios: liquidity ratios, profitability ratios, activity ratios and leverage ratios. These are typically analyzed over time and across competitors in an industry. Using ratios “normalizes” the numbers so you can compare companies in apples-to-apples terms. Liquidity and Solvency Solvency and liquidity are both refer to a company’s financial health and viability. Solvency refers to an enterprise's capacity to meet its long-term financial commitments. Liquidity refers to an enterprise’s ability to pay short-term obligations. Liquidity is also a measure of how quickly assets can be sold to raise cash. A solvent company is one that owns more than it owes. It has a positive net worth and is carrying a manageable debt load. A company with adequate liquidity may have enough cash available to pay its bills, but may still be heading for financial disaster down the road. In this case a company meets liquidity standards but is not solvent. Healthy companies are both solvent and possess adequate liquidity. Liquidity ratios are used to determine whether a company has enough current asset capacity to pay its bills and meet its obligations in the foreseeable future (current liabilities). Solvency ratios are a measure of how quickly a company can turn its assets into cash if it experiences financial difficulties or is threatened with bankruptcy. Both measure different aspects of if, and how long, a company can pay its bills and remain in business. The current ratio and the quick ratio are two common liquidity ratios. The current ratio is current assets/current liabilities and measures how much liquidity (cash) is available to address current liabilities (bills and other obligations). The quick ratio is (current assets – inventories) / current liabilities. The quick ratio measures a company’s ability to meet its short-term obligations based on its most liquid assets, and therefore excludes inventories from its current assets. It is also known as the “acid-test ratio.” The solvency ratio is used to examine the ability of a business to meet its long-term obligations. Lenders and bankers most commonly use the solvency ratio because they are most concerned about their ability to get paid back any money they lend. The ratio compares cash flows to liabilities. The solvency ratio calculation involves the following steps: All non-cash expenses are added back to after-tax net income. This approximates the amount of cash flow generated by the business. You can find the numbers to add back in the Operations section of the Cash Flow Statement. Add together all short-term and long-term obligations. This is the Total Liabilities number on the Balance Sheet. Then divide the estimated cash flow figure by the liabilities total. The formula for the ratio is: (Net after-tax income + Non-cash expenses)/(Short-term liabilities + Long-term liabilities) A higher percentage indicates an increased ability to support the liabilities of a business over the long-term. Acceptable solvency ratios vary from industry to industry, but as a general rule of thumb, a solvency ratio of greater than 20% is considered financially healthy. Remember that estimations made over a long term are inherently inaccurate. There are many variables that can impact the ability to pay over the long term. Using any ratio to estimate solvency needs to be taken with a grain of salt.
Views: 667 MBA ASAP
Introduction to Liquidity Ratios (Tamil)
 
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Did you liked this video lecture? Then please check out the complete course related to this lecture, available at discounted (only 640/-) price with life time validity and certificate of completion. https://www.udemy.com/financial-management-in-tamil/?couponCode=YTBFMT12 Welcome to this course " Financial Management in Tamil (தமிழ் மொழியில் நிதி மேலாண்மை)" தமிழ் மொழியில் நிதி மேலாண்மை - இந்த ஆன்லைன் பாடநெறிகளுக்கு உங்களை வரவேற்கிறோம். இந்த பாடத்திட்டத்தில் உங்கள் சொந்த தாய்மொழியில் நிதி மேலாண்மை பற்றி நீங்கள் அறிந்து கொள்வீர்கள். இந்த பாடத்தில் விவாதிக்க வேண்டிய தலைப்புகள்: a) Basics of Financial Management b) Time Value of Money c) Financial Ratio Analysis d) Cash Flow Analysis e) Fund Flow Analysis f) Capital Structuring Decisions g) Cost of Capital h) Capital Budgeting i) Working Capital Management இந்த பயிற்சி சுய வேகக் கற்றல் பாணியில் கட்டமைக்கப்பட்டுள்ளது. இந்த பாடத்திட்டத்தை எடுப்பதற்கு, கம்ப்யூட்டர் / மொபைல் ஃபோன் மூலம் நல்ல இணைய இணைப்பு தேவை. திறம்பட இந்த பாடத்திட்டத்தை கேட்க, நான் உங்கள் ஹெட்ஃபோனை பயன்படுத்த பரிந்துரைக்கிறேன். மீண்டும் இந்த பாடத்திட்டத்திற்கு உங்களை வரவேற்கிறேன்.
Views: 2318 CARAJACLASSES
Ratio Analysis - Various types of Ratios, their understanding and usefulness
 
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Mere reading of figures in a Company's financial statement may give an inaccurate or misleading picture of the Company’s performance and its financial standing in the industry. To understand any figure in the B/S or P/L account, it needs to be related to various other figures or be compared with peer group companies. Ratio Analysis helps you to understand and analyse every business - its profitability, solvency, efficiency, capital strength, liquidity, periodic performance and much more. Knowledge and use of Ratio Analysis is a must for every investor, business manager, banker, competitor, research analyst, creditor and any person taking a financial or commercial decision about the Company.
Ratio Analysis, Financial Ratio Analysis in Excel
 
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For details, visit: http://www.financewalk.com Ratio Analysis, Financial Ratio Analysis in Excel Financial Ratio Analysis Meaning- " The process of calculating the relationships between various pairs of financial statement values for the purpose of assessing a company's financial condition or performance is called ratio analysis." Users of Financial Analysis Financial Analysis can be undertaken by management of the firm, or by parties outside the firm like owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst. • Trade creditors- are interested in firm's ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evaluation of the firm's liquidity position. • Suppliers of long term debt- on the other hand, are concerned with the firm's long-term solvency and survival. They analyse the firm's profitability over time, its ability to generate cash to be able to pay interest and repay principal and the relationship between various sources of funds i.e. capital structure relationships. Long-term creditors do analyse the historical financial statements, but they place more emphasis on the firm's projected, or pro forma, financial statements to make analysis about its future solvency and profitability. • Investors -- who have invested their money in the firm's shares, are most concerned about the firm's earnings. They restore more confidence in those firms that show steady growth in earnings. As such, they concentrate on the analysis of the firm's present and future profitability. They are also interested in the firm's financial structure to the extent it influences the firm's earnings ability and risk. • Management - of the firm would be interested in every aspect of the financial analysis. It is their overall responsibility to see that the resources of the firm are used most effectively and efficiently, and that the firm's financial condition is sound.
Views: 112415 Avadhut Nigudkar
Ratio Analysis by Vijay Adarsh | Current ratio | Quick Ratio | Class 12 & B Com | StayLearning
 
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Accounting Ratios: - A ratio is a Mathematical expression that shows the relationship between various items or groups of items. When rations are calculated on the basis of accounting information, they are called Accounting Ratios. Ratio analysis is an important technique of financial analysis. It is the process of Determining and interpreting numerical relationship between figures of the financial statements. Thus ratios analysis is very important in revealing the financial position and soundness of the business. Objectives of Ratios Analysis:- 1) To know the areas of the enterprise which need more attention. 2) To know about the potential areas which can be improved on. 3) Helpful in comparative analysis of the performance. 4) Helpful in budgeting and forecasting. 5) To provide analysis of the liquidity, solvency, activity and profitability of the enterprise. 6) To provide information useful for making estimates and preparing the plans for future. Limitation of Ratio Analysis:- 1) Accounting Ratios ignore qualitative factors. 2) Absence of universally accepted terminology. 3) Ratios are affected by window- dressing. 4) Effects of inherent limitation of accounting 5) Misleading results in the absence of absolute data. 6) Price level changes ignored. 7) Impressed by personal bias and ability of the analyst. To View Full Video Lectures Visit - https://bit.ly/2PEEnUC ★ ACCOUNTS VIDEOS ★ https://www.youtube.com/channel/UCAXbiqmSkp9Sse4guGRMqDw?view_as=subscriber ★ COST ACCOUNTING VIDEOS ★ https://www.youtube.com/channel/UCAXbiqmSkp9Sse4guGRMqDw?view_as=subscriber ★ FINANCIAL MANAGEMENT VIDEOS ★ https://www.youtube.com/channel/UCAXbiqmSkp9Sse4guGRMqDw?view_as=subscriber ★ ECONOMICS VIDEOS ★ https://www.youtube.com/channel/UCK5RB8xNW_iOXz-rcGJZyTw?view_as=subscriber ★ INCOME TAX VIDEOS ★ https://www.youtube.com/channel/UCRRFVa1axTUdwZzc4Ta42XQ?view_as=subscriber ★ MATHS VIDEOS ★ https://www.youtube.com/channel/UCaIY3jMl7QDUWN6P6kSUYWw?view_as=subscriber STUDY TIPS ऐसे पढोगे तो हमेशा TOPPER बनोगे | Study Tips https://bit.ly/2QUXaew ENGLISH – Fatafat (Easy Way to Learn English) अंग्रेजी सीखें - फटाफट https://bit.ly/2PoAF4H ★ ExpertMotivation Channel https://bit.ly/2EsPBKC ★ For Any Information Video classes & Face To Face Batches Call +91 9268373738 E-mail: [email protected] (We Prefer emails rather than calls) Call timings Monday to Friday - Morning 10 to Evening 7 FACEBOOK: https://www.facebook.com/VijayAdarshIndia WEBSITE: http://www.vijayadarsh.com
Views: 273861 StayLearning
Ratio Analysis
 
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For full text article go to :https://www.educba.com/ratio-analysis/ In this article of Ratio Analysis, you will learn how they can be used to analyze a company. Understand the meaning and formulas associated with Liquidity ratios, Profitability ratios, Turnover ratios, and Debt ratios
Views: 28834 eduCBA
Financial Ratios -- Profitability
 
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Part five of a multipart example calculating some basic financial ratios. Part five focuses on the profitability ratios -- net profit margin, return on assets, and return on equity.
Views: 29647 Kevin Bracker
Profitability Ratio | Financial Accounting | CPA Exam FAR | Ch 15 P 7
 
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Profitability ratio, return on assets, return on common stock holders' equity, profit margin, asset turnover, liquidity ratio, solvency ratio, debt ratio, debt to equity ratio, analysis, common-size financial statements, acid test ratio, account receivable turnover, inventory turnover, asset turnover, financial statement analysis, vertical analysis, horizontal analysis, ratio analysis
Financial Statement Analysis: Common-Size | Ratios | Financial Accounting | CPA Exam FAR | Chp 17
 
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financial statement analysis, vertical analysis, horizontal analysis, ratio analysis. liquidity ratio, profitability ratio, market ratio, liquidity ratio, solvency ratio, market prospects ratio, working capital, trend analysis, common-size financial statements, acid test ratio, account receivable turnover, inventory turnover, asset turnover, gross profit, debt ratio, equity ratio, times interest earned, dividend yield. pe ratio
#1 RATIO ANALYSIS (Trick for Formula's ) in Hindi with solved Example By JOLLY Coaching
 
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AWESOME TRICK FOR SOLVING RATIO ANALYSIS QUESTIONS ... Help you to solve any question of ratio analysis(PART 1) Ratio analysis is a important concept for final exams as this chapter carry 4 to 6 marks. This video will help you to understand the formula's in simple language which will lead to solve any types of question in the exams. This video is the first part of ratio analysis which covers the important sums of current ratio. This video will help you to understand the formula to solve all sums in your books related to current ratio. I hope this video will help you to solve your practical problem. Thanks JOLLY Coaching. Ratio analysis in hindi Ratio analysis with examples ration analysis in hindi for 12th class 12th class ration analysis class 12th ratio analysis ratio analysis chapter in hindi class 12th ratio analysis in hindi current ratio how to calculate current ratio current ratio calculation current ratio calculation in hindi 12th class accounting accounting for 12th class liquidity ratio calculation of current ratio chapter current ratio ratio analysis chapter ratio analysis analysis of financial statement financial analysis financial statement tools of financial statement analysis in hindi easy to calculate current ratio formula for current ratio formula for ratio analysis chapter all formulas for ratio analysis formulas for ratio analysis ratio analysis chapter for 12th class 12th class ratio analysis
Views: 50640 JOLLY Coaching
Liquidity Ratios- Calculation of Current Ratio and Liquid Ratio- By Jitender Kumar
 
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Liquidity Ratios- Calculation of Current Ratio and Liquid Ratio- By Jitender Kumar { M.Com. , M.Phil. , C.M.A.(Inter) , C.S.(Inter) , P.G.D.B.A. , P.G.D.F.M. , U.G.C.N.E.T. Qualified } This is a channel for Financial Accounting, Corporate Accounting, Cost Accounting, Management Accounting and Financial Management. If you have doubts in a particular topic, whatsapp me that topic on my number 8447451771 or write in the comment box. I will definitely try to make tutorial for that topic. Brief description about Mr. Jitender Kumar Mr. Jitender Kumar is a graduate in commerce from Delhi University. He holds M.Com. and M.Phil degrees from Madurai Kamaraj University. He has also obtained Post Graduate Diploma in Financial Management and Post Graduate Diploma in Business Administration from Annamalai University. He qualified Cost and Management Accounting (C.M.A.)(Inter) in his first attempt and obtained All India Rank 48. He also qualified C.S.(Executive) in his first attempt securing first division. He qualified U.G.C.N.E.T. IN June 2012 with an enormous total of 75% marks. Besides this, he holds many certifications from National Stock Exchange(N.S.E.). Since 2002, he has taught many hundreds students. For more videos log on to: https://www.youtube.com/c/JitenderKumar2020 1. What does a high operating ratio indicate? Ans. High operating ratio indicates higher operating cost of the business & thus lower operating profits are available to the firm. 2. A Ltd. and B Ltd. are two companies operating in the same field and having STR of 4 times and 5 times respectively. Which company is having a better STR? Ans. STR of B Ltd. is better than the STR of A Ltd. since higher STR indicates efficient performance i.e. stock is being converted into sales quickly. 3. Give any two ratios judging the efficiency of a concern. Ans. STR and DTR. 4. What do you understand by Accounting Ratio? Ans. Accounting Ratio may be defined as a mathematical expression of the relationship between two items or group of items shown in the Financial Statements. 5. State any two limitations of Ratio Analysis. Ans. (i) Qualitative factors are ignored. (ii) Price level changes are not reflected. 6. State the limitation of ratio analysis regarding qualitative aspect. Ans. As ratio are arithmetical expression, qualitative aspect cannot be presented through ratios. Therefore, in making decision with the help of ratio, almost care should be taken, as ratio is only one-sided approach to measure the efficiency of the business. 7. Name the ratios that indicate the liquidity of an enterprise. Ans. Current Ratio and Liquid Ratio. 8. What is the ideal Current Ratio and Quick Ratio? Ans. Ideal Current Ratio 2:1, Ideal Quick Ratio 1:1 9. How the solvency of a business is assessed by ‘Financial Statement Analysis’? Ans. Through solvency Ratios, the solvency of a business is assessed by ‘Financial Statement Analysis’. 10. What does a low Debtors’ Turnover Ratio indicate? Ans. It may be an indication of long credit period or slow realisation from debtors. 11. What does a low working Capital Turnover Ratio indicate? Ans. It is an indication of inefficiency of working capital management. 12. How the ‘Earning Capacity of a business’ is assessed by ‘Financial Statement Analysis’? Ans. On the basis of ‘Profitability Ratios’ earning capacity of a business is assessed. 13. What will be the Operating Profit Ratio, if Operating Ratio is 82.95%? Ans. Operating Profit Ratio = 100- Operating Ratio = 100- 82.59 = 17.41%. 14. The gross Profit Ratio of a company is 50%. State with reason whether the decrease in rent received by Rs.15,000 will increase, decrease or not change the ratio. Ans. Decrease in rent received by Rs.15,000 will not change the Gross Profit Ratio because rent received neither effects the gross profit nor the net sales. 15. X Ltd. has a Debt Equity Ratio at 3:1. According to the management, it should be maintained at 1:1. What are the two choices to do so? Ans. The two choices to maintain Debt Equity Ratio at 1:1 are- a) To increase the Equity b) To reduce the debt. 16. You are a Debenture holder of a reputed company. Mention any two ratios that you will compute to examine whether your decision was justified. Ans. (i) Debt Equity Ratio (ii) Interest Coverage Ratio. 17. What does a higher inventory turnover ratio indicates? Ans. A higher inventory turnover ratio indicates that finished inventory is rapidly turning into sales.
Views: 1439 Jitender Kumar
Calculation of Profitability Ratios-G.P.Ratio/N.P.Ratio/Operating Ratio/Operating profit ratio
 
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Calculation of Profitability Ratios- G.P.Ratio/N.P.Ratio/Operating Ratio/Operating profit ratio -By Jitender Kumar { M.Com. , M.Phil. , C.M.A.(Inter) , C.S.(Inter) , P.G.D.B.A. , P.G.D.F.M. , U.G.C.N.E.T. Qualified } This is a channel for Financial Accounting, Corporate Accounting, Cost Accounting, Management Accounting and Financial Management. If you have doubts in a particular topic, whatsapp me that topic on my number 8447451771 or write in the comment box. I will definitely try to make tutorial for that topic. Brief description about Mr. Jitender Kumar Mr. Jitender Kumar is a graduate in commerce from Delhi University. He holds M.Com. and M.Phil degrees from Madurai Kamaraj University. He has also obtained Post Graduate Diploma in Financial Management and Post Graduate Diploma in Business Administration from Annamalai University. He qualified Cost and Management Accounting (C.M.A.)(Inter) in his first attempt and obtained All India Rank 48. He also qualified C.S.(Executive) in his first attempt securing first division. He qualified U.G.C.N.E.T. IN June 2012 with an enormous total of 75% marks. Besides this, he holds many certifications from National Stock Exchange(N.S.E.). Since 2002, he has taught many hundreds students. For more videos log on to: https://www.youtube.com/c/JitenderKumar2020 1. What does a high operating ratio indicate? Ans. High operating ratio indicates higher operating cost of the business & thus lower operating profits are available to the firm. 2. A Ltd. and B Ltd. are two companies operating in the same field and having STR of 4 times and 5 times respectively. Which company is having a better STR? Ans. STR of B Ltd. is better than the STR of A Ltd. since higher STR indicates efficient performance i.e. stock is being converted into sales quickly. 3. Give any two ratios judging the efficiency of a concern. Ans. STR and DTR. 4. What do you understand by Accounting Ratio? Ans. Accounting Ratio may be defined as a mathematical expression of the relationship between two items or group of items shown in the Financial Statements. 5. State any two limitations of Ratio Analysis. Ans. (i) Qualitative factors are ignored. (ii) Price level changes are not reflected. 6. State the limitation of ratio analysis regarding qualitative aspect. Ans. As ratio are arithmetical expression, qualitative aspect cannot be presented through ratios. Therefore, in making decision with the help of ratio, almost care should be taken, as ratio is only one-sided approach to measure the efficiency of the business. 7. Name the ratios that indicate the liquidity of an enterprise. Ans. Current Ratio and Liquid Ratio. 8. What is the ideal Current Ratio and Quick Ratio? Ans. Ideal Current Ratio 2:1, Ideal Quick Ratio 1:1 9. How the solvency of a business is assessed by ‘Financial Statement Analysis’? Ans. Through solvency Ratios, the solvency of a business is assessed by ‘Financial Statement Analysis’. 10. What does a low Debtors’ Turnover Ratio indicate? Ans. It may be an indication of long credit period or slow realisation from debtors. 11. What does a low working Capital Turnover Ratio indicate? Ans. It is an indication of inefficiency of working capital management. 12. How the ‘Earning Capacity of a business’ is assessed by ‘Financial Statement Analysis’? Ans. On the basis of ‘Profitability Ratios’ earning capacity of a business is assessed. 13. What will be the Operating Profit Ratio, if Operating Ratio is 82.95%? Ans. Operating Profit Ratio = 100- Operating Ratio = 100- 82.59 = 17.41%. 14. The gross Profit Ratio of a company is 50%. State with reason whether the decrease in rent received by Rs.15,000 will increase, decrease or not change the ratio. Ans. Decrease in rent received by Rs.15,000 will not change the Gross Profit Ratio because rent received neither effects the gross profit nor the net sales. 15. X Ltd. has a Debt Equity Ratio at 3:1. According to the management, it should be maintained at 1:1. What are the two choices to do so? Ans. The two choices to maintain Debt Equity Ratio at 1:1 are- a) To increase the Equity b) To reduce the debt. 16. You are a Debenture holder of a reputed company. Mention any two ratios that you will compute to examine whether your decision was justified. Ans. (i) Debt Equity Ratio (ii) Interest Coverage Ratio. 17. What does a higher inventory turnover ratio indicates? Ans. A higher inventory turnover ratio indicates that finished inventory is rapidly turning into sales.
Views: 3939 Jitender Kumar
MBA 1.2 Financial Management - Liquidity, Profitability, Efficiency, Performance, Stock
 
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Financial analysis of any company from its annual reports The annual reports are used to analyse the company’s Liquidity, Profitability, Efficiency, Capital Structure and Stock Market Performance 1. LIQUIDITY: The high level of working capital is likely to improve a company’s liquidity and avoid running out of the cash. 1.1 Current Ratio The company’s current ratio would be very high if it is under trading and over capitalized. Current ratio = Current Assets / Current Liabilities 1.2 Acid Test or Quick Ratio This ratio indicates a company’s short term debt paying ability. Acid Test or Quick Ratio = (Current Assets-Inventories) / Current Liabilities 1.3 Working Capital Turnover However if it is significantly higher then there could be a liquidity problem and company might be over trading with insufficient working capital. If it is much lower, it indicates poor use of the working capital resources and shows company’s inefficient working capital management. WC Turnover = Sales / Net Current Assets 2. PROFITABILITY: Profitability reveals how successfully the business is trading 2.1 Return on Capital Employed (ROCE) ROCE = Operating profit / (Equity + Noncurrent liabilities) x 100 2.2 Return on Equity (ROE) or Return on Investment (ROI) ROE = Profit after tax / Equity x 100 2.3 Gross Profit Margin Gross Profit Margin = Gross profit / Sales Revenue x 100 2.4 Operating Profit Margin Operating Profit Margin = Operating profit / Sales Revenue x 100 2.5 Net Profit Margin Net Profit Margin = Profit after tax / Sales Revenue x 100 3. EFFICIENCY It is a good measure to see how well working capital is being managed. 3.1 Inventory Turnover Ratio (Higher the better) Inventory Turnover Ratio = Cost of sales / Inventories 3.2 Receivable Turnover Ratio (Higher the better) Receivables Turnover Ratio = Sales Revenue / Trade Receivable 3.3 Payable Turnover Ratio (Lower the better) Payables Turnover Ratio = Cost of purchase or sales / Trade Payable 3.4 Asset Turnover Ratio (Higher the better) Asset Turnover Ratio = Sales Revenue / (Fixed Assets + Net Current Assets) 3.5 Inventory days (Lower the better) Inventory Days = 365 x Inventories / Cost of sales 3.6 Receivable days (Lower the better). Receivable Days = 365 x Trade Receivable / Sales Revenue 3.7 Payable days (Higher the better) Payable Days = 365 x Trade Payable / Cost of purchase or sales 3.8 Cash operating cycle (Cash Conversion Cycle) (Shorter the better) Cash operating cycle = Inventory days + Receivable days - Payable day 4. CAPITAL STRUCTURE Gearing can be used to magnify the company sale. 4.1 Gearing ratio Gearing ratio = Noncurrent liabilities / (Equity + Noncurrent liabilities) x 100 4.2 Debt to Equity ratio There will be more risk to shareholders if this ratio is higher than 50% and 10% ratio is considered to be low risky. Debt to Equity Ratio = Noncurrent liabilities (Debt) / Equity x 100 4.3 Interest cover ratio More risk to shareholders if this ratio is very low as company can default on its interest payments. Interest cover ratio = Operating profit / Finance charge 5. STOCK MARKET PERFORMANCE These ratios are used by existing and potential investors who are deciding whether to hold, sell or buy shares in the company. 5.1 Earnings per Share (EPS) Indicates how much profit is generated for shareholders for each share in issue. Shown at the end of the Income Statement 5.2 Price to Earnings ratio High Price to Earnings ratio indicates that investors are prepared to pay a very high price.. Price to Earnings ratio (P/E) = Market value per share / Earnings per share 5.3 Dividend Yield ratio Dividend Yield is the return to the shareholders ignoring any change in the share price over an accounting period. Dividend Yield Ratio = Dividend per share / Market value per share x 100 5.4 Dividend Payout ratio If payout ratio is low, more money is being retained & reinvested for the future growth. Dividend Payout ratio = Dividend per share / Earnings per share x 100 5.5 Dividend Cover The higher the dividend cover the lower the risk that future dividends will fall below the current dividend level. Dividend Cover = Earnings per share / Dividend per share
Views: 308 VMB
#3| ratio analysis | liquidity ratios | important questions |
 
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This video is suitable for CA FOUNDATION RATIO ANALYSIS | RATIO ANALYSIS CS EXECUTIVE | RATIO ANALYSIS CA FOUNDATION | CA RATIO ANALYSIS | BCOM RATIO ANALYSIS | RATIO ANALYSIS BBA | CLASS 12 RATIO ANALYSIS | CLASS 12 ACCOUNTANCY RATIO ANALYSIS | RATIO ANALYSIS CMA | RATIO ANALYSIS CA INTER | RATIO ANALYSIS CLASS 12 | RATIO ANALYSIS BCOM 2ND YEAR | LIQUID RATIO ANALYSIS | CLASS 12 CURRENT RATIO | CURRENT RATIO AND QUICK RATIO | CURRENT RATIO AND LIQUID RATIO | CS EXECUTIVE RATIO ANALYSIS | CA CPT RATIO ANALYSIS | RATIO ANALYSIS OF FINANCIAL STATEMENT | RATIO ANALYSIS ACCOUNTING | RATIO ANALYSIS CA CPT | RATIO ANALYSIS CA . To watch complete course click here :- https://www.vidyakul.com/super-saver/super-saver-by-chandan-sir For Videos related call at :- 9818434684 For Books related enquiry :- 9818434684 or 9953633448 For any other Enquiry :- 9953633448 Mail ID :- [email protected]
RATIO Video 1. RATIO ANALYSIS TYPES & LIQUIDITY RATIO FOR CLASS 12 accounts, BBA B.COM MBA
 
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Ratio Analysis Ratio means comparison of quantitative relationship between two common variables that expresses how much bigger one is than the other. Accounting ratio analysis is a scientific and effective tool of evaluating operating and financial position of a company by determining and interpreting quantitative relationship among variables of financial statement. Types of Accounting Ratio Broadly Accounting ratio has been classified into four categories: 1. Liquidity ratio These ratios are calculated to measure the firm’s ability to meet short term obligations. 2. Solvency ratio It is calculated to assess long term financial position of the company and ability to pay off long term obligations. 3. Turnover or Activity ratio These ratios help to assess how efficiently a company is utilizing its resources. 4. Profitability ratio These ratios help to assess business ability to generate profit out of sales and expenses incurred on generation sales. Types of Liquidity ratio I. Current ratio = Current Asset ÷ Current Liability (2:1 is ideal) II. Liquid ratio/ Quick ratio/ Acid Test Ratio = Liquid or quick asset ÷ Current Liability (1:1 is ideal) Note: Current Asset = Current Investment + Inventories (excluding spares & loose tools)+Net Trade receivables (Trade Receivable - Provision for doubtful debts and discount on debtors) +Cash & Cash equivalent+Short term loans & advances+Other current assets such as Prepaid expenses, Accrued income, Interest receivable, advance tax Current liability = Short term borrowing +Trade payables+Short term provisions+Other current liability such as Outstanding expense, Income received in advance. Liquid Asset = Current asset – Inventory – Prepaid expense Working Capital = Current Asset – Current Liability LINK FOR VIDEO 1 - INTRODUCTION TO RATIO ANALYSIS & LIQUIDITY RATIOS VIDEO https://youtu.be/ZQafR3kiruo LINK FOR VIDEO 2 - SOLVENCY RATIO FORMULA https://youtu.be/92p3HRm6o3k LINK FOR VIDEO 3 - ACTIVITY RATIOS FORMULA https://youtu.be/yYTpTuBEU5Q LINK FOR VIDEO 4 - PROFITABILITY RATIOS FORMULA https://youtu.be/ePAzJNGFF-I LINK FOR NOTES ON RATIO ANALYSIS http://gyanvikalpa.blogspot.in/search/label/financial%20ratio LINK FOR ALL NOTES OF ACCOUNTS: www.gyanvikalpa.blogspot.in LINK FOR CASH FLOW STATEMENT VIDEOS VIDEO 1. CASH FLOW INTRODUCTION https://youtu.be/WHYYpgkwIuw VIDEO 2. CASH FLOW STATEMENT FORMAT https://youtu.be/xyy_nj0Kk-o VIDEO 3. CASH FLOW ADJUSTMENT ENTRIES https://youtu.be/8I82xJ3CGxo
Views: 1916 Gyan Vikalpa
Session 03: Objective 3 - Ratio Analysis (2016)
 
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The Finance Coach: Introduction to Corporate Finance with Greg Pierce Textbook: Fundamentals of Corporate Finance Ross, Westerfield, Jordan Chapter 3: Working With Financial Statements Objective 3 - Key Concepts: Short-Term Solvency Ratios (Liquidity) -Current Ratio -Quick Ratio -Cash Ratio Long-term Solvency Ratios -Total Debt Ratio -Debt To Equity Ratio -Equity Multiplier -Long Term Debt To Equity Ratio -Times Interest Earned Ratio -Cash Coverage Ratio Asset Management Ratios Days Sales Outstanding -Inventory Turnover Ratio *X Turnover Ratio = Sales/"X".... with the exception of Inventory Turnover Profitability Ratios Net Return on "X" = Net Income/"X" Market Value Ratios -Price Earnings Ratio -Earnings Per Share -Market to Book Ratio More Information at: http://thefincoach.com/
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Profitability Ratios
 
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Profitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of a company to generate income (profit) relative to revenue, balance sheet assets, operating costs, and shareholders’ equity during a specific period of time. Click here to learn more about this topic: https://corporatefinanceinstitute.com/resources/knowledge/finance/profitability-ratios/
Understanding Financial Ratios
 
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Views: 105331 Dr. John Daniel McLellan
Ratio Analysis MasterClass | JAIIB | CAIIB | Very Important
 
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This Ratio Analysis Masterclass covers all important ratios. You will learn- 1) Ratio Analysis Basics. 2) Advantages of Ratio Analysis. 3) Format of Balance Sheet for Ratio Analysis. 4) Liquidity Ratios. a) Current Ratio. b) Acid test Ratio. c) Absolute Liquid Ratio. 5) Turnover Ratios. a) Inventory Turnover Ratio b) Debtor Turnover Ratio (Debtors Velocity) c) Creditor Turnover Ratio.(Creditors Velocity) d) Assets Turnover Ratio. 6) Solvency Ratios. 7) Profitability Ratios. [JAIIB 2019 Question Bank] Principles and Practices of Banking 1000 Series by K G Khullar Link 1 - https://imojo.in/86mp39 [JAIIB 2019 Question Bank] Accounting and Finance for Bankers 1000 Series by K G Khullar Link 1 - https://imojo.in/emtyvp [JAIIB 2019 Question Bank] Legal and Regulatory Aspects of Banking 1000 Series Link 1 - https://imojo.in/3hjlai [JAIIB 2019 Cheat Sheet] Legal+ Accounting Summarised Notes Link 1 - https://imojo.in/1opdql Banking Case Studies and Rationale [400 Plus Case Studies] Link 1 - https://imojo.in/11ffrj [FREE] Principles and Practices of Banking: 30 Day Excel Planner Template by K G Khullar http://imojo.in/fjkm36 [FREE] Legal and Regulatory Aspects of Banking: 30 Day Excel Planner Template by K G Khullar http://imojo.in/8rgw2b [FREE] Ratio Analysis Template for Bankers by K G Khullar https://imojo.in/f2ybf9 [CAIIB 2019 Question Banks COMBO] https://imojo.in/3ursg3g [QUESTION BANK] ABM 1000 Series- https://bit.ly/2StObFH [QUESTION BANK] BFM 1000 Series - https://bit.ly/2TySSvf [FREE] Advanced Bank Management 30 Day Excel Planner https://imojo.in/62ex8j [FREE] Bank Financial Management 30 Day Excel Planner http://imojo.in/2ffk5c
Financial Ratio Analysis Tutorial Part 1: Introduction, Liquidity Ratios the Current Ratio
 
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http://www.subjectmoney.com http://www.subjectmoney.com/definitiondisplay.php?word=The%20Current%20Ratio This is the first video of a video series covering financial ratio analysis. In this video we introduce what financial ratios are and how they are used in financial analysis of a publicly traded company. We use financially analyze Bed Bath and Beyond BBBY and Pier 1 PIR. In this video we also introduce liquidity ratios and teach in detail about the current ratio. The current ratio is a liquidity ratio used to determine how well a company could pay off its short-term liabilities with its short-term or "current" assets. Current assets are cash and other assets that can easily be converted to cash (within 12 months). Since current assets can quickly be converted to cash, if a company was required to pay all of its current obligations, it should be able to convert all current assets into cash in order to meet its short-term obligations. The current ratio can be defined as total current assets divided by total current liabilities.
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