Bad Bank "An Asset Management Company"

 

     Ratio Analysis

                   Ratio Analysis is mainly used for decision making purpose. It shows the relationship between figures in the balance sheet, profit and loss account and other parts of the account. Ratio Analysis is the powerful tools for measuring organizational performance.  This analysis helps to make the future projection with the help of past records and data’s. Comparison between two companies can be easily compared. It helps to draw the opinion and comes to the conclusion for the Investors, Shareholders, Government and Bankers. Investors and Shareholders analyze the ratio for Investment and Disinvestment in the firm. Government agency analyzes the ratio for reviewing the performance of the firm. Similarly, Bankers who provide working capital will analyze the ratio for appraising the creditworthiness of the firm.

The Classification  of Ratio has been done in various ways. But the major classification applicable these days has been enlisted below :

Classification of Ratios:

1.   Ratio (On the basis of Financial Statement)

        Balance Sheet                      Profit & Loss Alc                        Composite Ratio

-          Current Ratio                            -   Gross Profit Ratio               -    Trade Receivable Turnover Ratio

-          Quick Ratio                               -   Net Profit Ratio                   -    Trade Payable Turnover Ratio

-          Debt-Equity Ratio                     -   Operating Ratio                    -    Working Capital Turnover Ratio

-          Debt to Total Assets Ratio      -   Operating Profit Ratio         -    Inventory Turnover Ratio

-          Proprietary Ratio                       -   Interest Coverage Ratio      -    Earning Per Share

                                                                                                     -    Price Earning Ratio

                                                                                                     -    Return on Investment

 2. Ratio (On the basis of User Analysis)

Liquidity Ratio

a.    Current Ratio

b.    Quick Ratio

c.    Working Capital Ratio

Solvency/Leverage/Capital Structure Ratio

a.    Debt Equity Ratio

b.    Shareholders Equity Ratio

c.    Proprietary Ratio

d.   Capital Gearing Ratio

e.    Interest Coverage Ratio (ICR)

f.    Debt Service Coverage Ratio (DSCR)

Assets Management/Turnover/Activity/Performance Ratio

a.    Inventory Turnover Ratio

b.    Debtor Turnover Ratio

c.    Debtor Collection Period/Debtor Velocity Ratio

d.   Creditor Turnover Ratio

e.    Creditor Collection Period/Creditor Velocity Ratio

f.    Working Capital Turnover Ratio

g.    Bad debt to Sales Ratio

h.    Fixed Assets Turnover Ratio

i.     Total Assets Turnover Ratio

Profitability Ratio’s :

1.   Ratio based on Rate

a.    Gross Profit Ratio

b.    Net Profit Ratio

c.    Cash Profit Ratio

d.   Return on Total Assets Ratio

e.    Return on Shareholders Fund/Return on Net Worth

f.    Return on Investment

 

2.   Operating Ratio’s

a.    Operating Ratio

b.    Operating Profit Ratio

 

3.   Market Based Ratio’s

a.    Earning Per Share

b.    Dividend Payout Ratio

c.    Dividend Yield

d.   Price Earning Ratio

e.    Market to Book Value Ratio

f.    Book Value

g.    Cash Earning Per Share