|
S.no. |
Ratio Name |
Formula |
Ideal Ratio |
What is better |
Remarks |
|
1 |
Debtor Turnover Ratio |
Net Sales / Debtors |
Depand upon Business to Business |
Higher the better |
Net Sales=Sales+Direct Income-Sales Return |
|
2 |
Debtors Collection Period |
360/ Debtors turnover ratio |
Depand upon Business to Business |
Lower the better |
Bank normally does not takes debtors more then 90 days |
|
3 |
Creditors for direct exp. And Purchases Turnover Ratio |
Purchase +Direct Exp. / Creditors |
Depand upon Business to Business |
Lower the better |
Only Creditors for Purchases to be taken |
|
4 |
Creditors for Indirect Exp. Turnover Ratio |
Indirect Exp. / Creditors |
Depand upon Business to Business |
Lower the better |
All Indirect Exp. Except Dep and Intrest |
|
5 |
Creditors payment period (pur +direct exp) |
360/CTR |
Depand upon Business to Business |
Lower the better |
While taking bank loan, we should not show more then 30 to 60 days creditors, hence it should not be too high. |
|
6 |
Creditors payment period (indirect exp) |
360/CTR |
Depand upon Business to Business |
Higher the better |
While taking bank loan, we should not show more then 30 to 60 days creditors, hence it should not be too high. |
|
7 |
Inventory Turnover Ratio |
COGS/Inventory |
Depand upon Business to Business |
Higher the better |
COGS=Cost of Goods Sold i.e. Sales+ Direct Income-GP Or Opening Stock +Purchases-Closing Stock
In case of factories we calculated seprately for raw material, wip, finished goods. |
|
8 |
Inventory Holding Period |
360/ITR |
Depand upon Business to Business |
Lower the better |
In case of factories we calculated seprately for raw material, wip, finished goods. |
