Accounting Basics Tutorial
Financial Accounting
Cost Accounting
Cost Accounting Techniques
Management Accounting
Accounting Useful Resources
Selected Reading
- Accounting - Systems
- Accounting - Conventions
- Accounting - Basic Concepts
- Accounting - Process
- Accounting - Overview
- Accounting - Home
Financial Accounting
- Financial Accounting - Depreciation
- Financial Accounting - Books
- Financial Accounting - Ledger
- Financial Accounting - Journal
Cost Accounting
- Cost Accounting - Budgeting
- Cost Accounting - Cost Reduction
- Cost Accounting - Cost Control
- Cost Accounting - Cost Sheet
- Cost Accounting - Elements of Cost
- Cost Accounting - Cost Classification
- Cost Accounting - vs. Financial A/c
- Cost Accounting - Advantages
- Cost Accounting - Introduction
Cost Accounting Techniques
- Cost Accounting - CVP Analysis
- Cost Accounting - Variance Analysis
- Cost Accounting - Standard Costing
- Cost Accounting - Marginal Costing
Management Accounting
- Management A/c - Working Capital
- Management A/c - Useful Ratios
- Management A/c - Ratio Analysis
- Management A/c - Cash Flow
- Management A/c - vs. Financial A/c
- Management A/c - vs. Cost A/c
- Management A/c - Introduction
Accounting Useful Resources
Selected Reading
- Who is Who
- Computer Glossary
- HR Interview Questions
- Effective Resume Writing
- Questions and Answers
- UPSC IAS Exams Notes
Management A/c - Useful Ratios
Management Accounting - Useful Ratios
| Short–term Financial Position or Test of Liquidity | |
|---|---|
| (a) Current Ratios | = Current Assets Current Liabipties |
| (b) Quick or Acid Test or Liquid Ratio | = Liquid Assets Current Liabipties |
| (c) Absolute Liquid Ratio | = Absolute Liquid Assets Current Liabipties |
| (d) Interval Measure | = Liquid Assets Avg.Daily Operating Expenses |
| Current Assets Movement (Asset Management Ratios) | |
| (a) Inventory /Stock Turnover Ratio | = Cost of Goods Sold Avg.Inventory at Cost |
| (b) Debtors or receivables Turnover Ratio/Velocity | = Net Credit Annual Sale Avg.Trade Debtors |
| (c) Average Collection Period | = Total Trade Debtors Sale per Day |
| (d) Creditors / Payable Turnover Ratio / Velocity | = Net Credit Annual Purchase Avg.Trade Creditors |
| (e) Average Payment Period | = Total Trade Creditos / Payable Avg.Daily Purchase |
| (f) Working Capital Turnover Ratio | = Sales or Cost of Sales Net Working Capital |
| Analysis of Long-term Financial Position or Test of Solvency | |
| (a) Debt Equity Ratio |
=
Outsiders Funds
Shareholders′ Funds
or = Outsiders′ Equities Internal Equities |
| (b) Funded Debt to Total Capitapzation Ratio | = Funded Debts Total Capitapzation × 100 |
| (c) Ratio of Long term Debt to Shareholders, Funds (Debt Equity) | = Long term Debts Shareholders′ Funds |
| (d) Proprietary or Equity Ratio | = Shareholders Funds Total Assets |
| (e) Solvency Ratio | = Total Liabipties to Outsiders Total Assets |
| (f) Fixed Assets Net Worth Ratio | = Fixed Assets after Depreciation Shareholders′ Funds |
| (g) Fixed Assets Ratio or Fixed Assets to Long Term Funds | = Fixed Assets after Depreciation Total long term Fund |
| (h) Ratio of Current Assets to Proprietary funds | = Current Assets Shareholders′ Funds |
| (i) Debt-Service or Interest Coverage | = Net Profit (before Int. & Taxes) Fixed Interest Charges |
| (j) Total Coverage or Fixed Charge Coverage | = EBIT Total Fixed Charges |
| (k) Preference Dividend Coverage Ratio | = Net Profit (before Int.& Tax) Preference Dividend |
| (l) Cash to debt-Service Ratio or Debt Cash Flow Coverage |
=
CF
1 +
SFD
1 − Tax Rate
CF = Annual cash flow before Int. & Tax SFD = Sinking fund appropriation on debt |
| Analysis of Profitabipty | |
| (i) General Profitabipty: | |
| (a) Gross Profit Ratio | = Gross Profit Net Sale × 100 |
| (b) Operating Ratio | = Operating Cost Net Sale × 100 |
| (c) Expenses Ratio | = Particular Expense Net Sale × 100 |
| (d) Net Profit Ratio | = Net Profit after Tax Net Sale × 100 |
| (e) Operating Profit Ratio | = Operating Profit Net Sale × 100 |
| Overall Profitabipty | |
| (a) Return on Shareholders’ Investment (RoI) | = Net Profiti after Tax & Interest Shareholders′ Fund × 100 |
| (b) Return on Equity Capital | = Net Profit after Tax − Pref.Dividend Paid up Equity Capital × 100 |
| (c) Earnings per Share (EPS) | = Net Profit after Tax − Pref.Dividend Number of Equity Share × 100 |
| (d) Return on Gross Capital Employed | = Adjusted Net Profit Gross Capital Employed × 100 |
| (e) Return on Net Capital Employed | = Adjusted Net Profit Net Capital Employed × 100 |
| (f) Return on Assets | = Net Profit after Tax Avg.Total Assets × 100 |
| (g) Capital Turnover Ratio | = Sale or Cost of Sale Capital Employed × 100 |
| (h) Fixed Assets Turnover Ratio | = Sale or Cost of Goods Sold Fixed Assets × 100 |
| (i) Working Capital Turnover Ratio | = Sale or Cost of Goods Sold Net Working Capital × 100 |
| Market Test or Valuation Ratio | |
| (a) Dividend Yield Ratio | = Dividend per Share Market Value per Share |
| (b) Dividend Payout Ratio | = Dividend per Equity Share Earnings per Share |
| (c) Price/Earnings (P/E) Ratio | = Market Price per Equity Share Earnings per Share |
| (d) Earning Yield Ratio | = Earnings per Share Market price per share |
| (e) Market Value Book Value Ratio | = Market value per share Book value per share |
| (f) Market Price to Cash Flow Ratio | = Market price per share Cash flow per share |
| Market Test or Valuation Ratio | |
| (a) Capital Gearing Ratio | = Equity Share Capital + Reserve & Surplus Pref.Capital + Long term Debt bearing Fixed Interest |
| (b) Total Investment to Long Term Liabipties | = Shareholders Fund + Long term Liabipties Long term Liabipties |
| (c) Debt Equity Ratio | = Outsiders Funds Shareholders Funds |
| (d) Ratio to Fixed Assets to Funded Debt | = Fixed Assets Funded Debts |
| (e) Ratio of Current Liabipties to Proprietors fund | = Current Liabipties Shareholders′ Funds |
| (f) Ratio of Reserve to Equity Capital | = Reserves Equity Share Capital × 100 |
| (g) Financial Leverage | = EBIT EBIT − Interest & Pref.Dividend |
| (h) Operating Leverage | = Contribution EBIT |