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?
CMA Poornima Madhava
(CMA)
(13097 Points)
Replied 02 June 2009
Some of the ratios are: Current ratio, debt/ equity ratio, total outside liabilities/ tangible net worth
Suprio
(Sr. Manager Accounts & Systems)
(43 Points)
Replied 03 June 2009
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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