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Ratios
Ratios
11. Debt Equity Ratio = Total outside Liability / Tangible Net Worth.
17. Cost of Goods Sold Ratio = Cost of Goods Sold / Net Sales * 100.
18. Operating Profit Ratio = Earnings Before Interest Tax / Net Sales * 100
20. Net Profit Ratio = Net Profit After interest and Tax / Net Sales * 100
31. Return on Capital Employed = Net Profit Before Interest and Tax
Average Capital Employed.
32. Average Capital employed = Equity Capital + Long Term Funds provided by
Owners & Creditors at the beginning & at the
end of the accounting period divided by two.
35. Earnings Per Share = Net Profit After Taxes and Preferential dividends
Number of Equity Share.
36. Dividend per Share = Net Profit After Taxes and distributable dividend
Number of Equity Shares.
38. Dividend Pay Out Ratio = Dividend paid to Equity Share holders
Net Profit available for Equity Share Holders.
39. Price Earning Ratio = Market Price per equity Share / Earning per Share.
40. Total Asset Turnover = Cost of Goods Sold / Average Total Assets.
41. Fixed Asset Turnover = Cost of Goods Sold / Average Fixed Assets.
44. Working Capital Turnover = Cost of Goods Sold / Net Working Capital.
46. DSCR = Profit after Tax & Depreciation + Int. on T L & Differed Credit +
Lease Rentals if any divided by Repayment of Interest &
Installments on T L & Differed Credits + Lease Rentals if any.
MODULE – D – RATIOS
1. Factory Cost = Prime cost + Production Overheads.
6. Break Even Margin or Margin of Safety = Sales – Break Even Point / Sales.
9. Sales volume requires = Fixed cost + Required profit / Contribution per unit.
10. BEP in Sales = ( Fixed Costs / Contribution per unit ) * Price per unit.
11. Contribution Sales Ratio = ( Contribution per unit / Sale price per unit ) * 100
12. Level of sales to result in target profit after Tax = Target Profit
1 – Tax rate / Contribution per unit
13. Level of sales to result = (Fixed Cost + Target profit) * sales price per unit
in target profit Contribution per unit.
:4:
MODULE – A
2. SIP Turnover =
46. DSCR =
MODULE – D – RATIOS
1. Factory Cost =
3. Contribution =
8. BEP =
7. Costs & benefits associated with a capital expenditure are spread out over a
long period of time, it creates some problems in estimating discount rates and
establishing equivalence.
10. The stream of costs and benefits associated with the project can be defined
based on analysis.
15. Returns in the form of Capital Appreciation and dividends which Equity share
holders expect are relatively high and called servicing cost of equity capital.
16. Retaining profits or a part of them is a way of effectively raising the finance.
34. Sec 58A of Companies Act regulates the Fixed Deposits from public.
37. The sources and uses statement is also called the statement of changes in
financial position.
MISTAKES IN MODULE – D
7. Alternative names for Marginal Costing are Contribution Approach & Direct
Costing.
33. Operating leverage pertains to the amounts of fixed costs which a company
employees in its cost structure.
34. Greater the amount of fixed costs in operating cost structure, other things
being equal the greater will be the impact on profits from a given change in sales.
36. Cost Accounting Deals with the use of control of costs and planning of costs.
6. Break Even Margin or Margin of Safety = Sales – Break Even Point / Sales.
13. The Return on Investment method can be used as decision making tool by
setting minimum Rate on Investment.
30. The economic slowdown had dwindled opportunities for safe investments by
the customers.
39. The transition matrix provides the probability of slippage in credit quality.
40. By using VAR the pricing of an advance portfolio can be fine tuned.
42. Primary purpose of Credit Rating Assessment is to measure & grade Risk.
43. Under Credit Rating Assessment the risks are classified into Financial Risks,
Industry Risks and Management Risks.