Accounting Ratios

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What are the necessary ratio required to submit in the bank for availing Cash Credit?is there any Software  available for preparing the projected balance sheet with accounting ratios?

Replies (2)

Some of the ratios are: Current ratio, debt/ equity ratio, total outside liabilities/ tangible net worth

Basically ratios are 4 types

1.  Liquidity Ratios.

a) Current ratio              Current assets /  Current Liabilities

b) Acid test ratio             Quick assets   /  Current Liabilities

c) Bank Finance- Working

    Capital Gap ratio           Short-term Bank Borrowing / working capital Gap

2.  Leverage Ratio

a) Debt-Equity ratio         Debt  / equity

b)  Debt-Asset ratio         Debt / assets

c)  Interest Coverage ratio  EBIT / Interest

3.  Turnover Ratio

a) Inventory - Turnover ratio   Net sales / Inventory

b) Average collection period     Receivables / Average sales per day

c) Receivables - Turnover ratio   Net sales / Receivables

d) Fixed asset - Turnover Ratio    Net sales / Fixed assets

e) Total assets - Turnover Ratio    Net sales / Total assets

4.  Profitability Ratio

a)  Gross profit margin ratio         Gross profit / Net sales

b)  Net profit margin ratio               Net profit / net sales

c)  Net income to Total asset ratio   Net profit / total assets

d)  Return on Investment                  EBIT /Total assets

e)  Return on Equity                           Equity Earnings / Net Worth

 

 

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