Calculate your companies financial result ratio’s
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Financial Ratio’s Explained
Income Statement Ratio’s
Ratio | Formula | Description | |
1 | Gross Profit Margin | (Revenues – COGS) / Revenues | It is a profitability ratio that indicates the percentages of remaining revenues after deducting the cost of goods sold. |
2 | Operating Profit Margin | Operating Profit / Revenues | This ratio analyzes the company’s profitability at its operating level. |
3 | Net Profit Margin | Net Profit / Revenues | This ratio analyzes the company’s profitability after deducting all costs and expenses in the business. |
4 | Return on Assets | Net Profit / Average Assets | This ratio measures the company’s ability in generating profit from its assets. |
5 | Return on Equity | Net Profit / Average Equity | This ratio measures the company’s ability in generating profit from its equity. |
6 | Assets Turnover | Sales / Average Assets | This ratio measures the company’s performance in utilizing its assets to generate sales. |
7 | Interest Coverage Ratio | Earnings before Interest and Tax / Interest Expenses | This ratio analyzes the company’s ability to pay interest to its creditors. |
8 9 | Earnings Per Share Price-Earnings Ratio | 8.(Net Profit – Preferred Dividends) / Common Shares 9.Market Value per Share / Earnings per Share | 8. This ratio analyzes the company’s ability to generate profit to its common shareholders. 9. This ratio analyzes the relationship between the company’s share price and its earnings per share. |
Balance Sheet Ration’s
Ratio | Formula | Decription | |
1 | Current Ratio | Current Assets / Current Liabilities | This ratio analyzes the company’s liquidity by using its current asset to pay the current liability. |
2 | Quick Ratio | (Current Assets – Inventory) / Current Liabilities | This ratio analyzes the company’s liquidity by using its current asset which excludes inventory to pay the current liability. This is due to the inventory may take some time to convert to cash. |
3 | Cash Ratio | Cash and Cash Equivalent / Current Liabilities | This ratio analyzes the company’s ability to pay its short-term liability in the stress situation where its inventory won’t sell and its receivables won’t be able to be collected in a short period of time. |
4 | Receivables Turnover | Net Credit Sales / Average Receivables | This ratio measures how fast the company can collect payment from its receivables. |
5 | Days Sales Outstanding | (Receivables / Credit Sales) x 365 | This ratio measures how long the company takes in days to collect payment from its receivables after the sales have been made |
6 | Doubtful Account | Allowance for Doubtful Accounts / Receivables | This ratio analyzes the quality of the company’s receivables. It is usually used by auditors in the examination of receivables. |
7 | Inventory Turnover | Cost of Goods Sold / Inventory | This ratio measures how many times the company sold and replaced its inventory during the period |
8 | Days Inventory Outstanding | (Inventory / Cost of Goods Sold) x 365 | This ratio measures how long the company takes in days to sell its inventory. |
9 | Payables Turnover | Purchases / Average Payables | This ratio measures how many times the company pays its payables during the period. |
10 | Days Payable Outstanding | (Payables / Cost of Goods Sold) x 365 | This ratio measures how long the company takes in days to pay back its payables. |
11 | Debt-to-equity Ratio | Liabilities / Equity | This ratio analyzes the company’s financial leverage which indicates how much debt the company uses comparing to its equity in running the business. |
12 | Debt-to-asset Ratio | Liabilities / Assets | This ratio analyzes the company’s financial leverage which indicates how much debt the company uses comparing to its total assets. |