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Learn Ratio Analysis in 15 Minutes | Tricks and Formula | Types Of Ratio Analysis | Assignment Prime - YouTube

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foreign

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[Music]

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ratio analysis formulas in 15 minutes

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learning ratio analysis formulas are not

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easy but with a few simple tips by the

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experts it will become a piece of cake

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for you ratio analysis what is ratio

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analysis so basically ratio analysis is

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a process to gain a deeper insight into

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the Financial Health of a company by

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comparing and analyzing the information

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provided in the financial statements

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ratio analysis formulas

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to compare and analyze the information

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recorded in the financial statements

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certain formulas are used let's have a

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look at them

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liquidity ratio

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profitability ratio

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working capital ratio

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capital structure ratio

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overall profitability ratio liquidity

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ratio the first one is the liquidity

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ration which is also known as solvency

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ratio it focuses on the company's

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current assets and liabilities to

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analyze if it can pay the short-term

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debts the three common liquidity ratios

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and their formulas are

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current ratio current assets upon

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current liabilities

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quick ration liquid assets upon current

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liabilities absolute liquid ratio

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absolute liquid assets upon current

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liabilities

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profitability ratio

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another ratio is the profitability ratio

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that analyzes how a company uses its

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assets and how effectively it generates

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the profit from the equities and assets

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let's take a look at some examples of

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profit ratio and their formulas gross

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profit ratio gross profit upon net sales

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multiply by 100 operating profit ratio

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operating profit upon net sales

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multiplied by 100 net profit ratio

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operating profit upon net sales multiply

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by 100. working capital ratio the next

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one on the list is the working capital

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ratio this ratio analyzes if the company

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can pay off the current debts or

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liabilities using the current assets

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some of the Common working capital

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ratios and their formulas are

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inventory ratio net sales upon inventory

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debtors turnover ratio total sales upon

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nbsp account receivables debt collection

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ratio receivables multiply by months or

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days in a year upon net credit sales for

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the year

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capital structure ratio capital

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structure ratio is one of the important

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financial ratios that analyzes how

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structurally a firm uses the capital or

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funds to finance its operations the

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examples and formulas of capital

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structure ratio are

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debt equity ratio total long-term debts

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upon shareholders fund proprietary ratio

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shareholders fund upon total assets

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Capital gearing ratio equity share

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Capital upon fixed interest bearing

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funds overall profitability ratio the

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last ratio is overall profitability

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ratio that measures how profitable a

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particular firm or company is or how it

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can turn its assets and capital into

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profits for future use an example of

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overall profitable ratio and its formula

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overall profitability ratio net profit

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upon total assets tips to learn ratio

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analysis formulas easily

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one dot understand

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two dot categorize the first tip is to

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understand all the ratios because simply

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trying to memorize them will make it

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difficult to remember them so try to

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understand all the ratios so that they

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can stick to your memory write down each

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ratio and work each out several times

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using different numbers until you have a

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firm grasp of what each one means the

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second tip is to categorize each set of

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financial ratios according to the type

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of information it provides Market

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valuation liquidity profitability

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efficiency coverage and leverage are six

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categories in which you can place the

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most financial ratios

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three dot prioritize

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four dot create visual representation

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prioritizing the key financial ratios is

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an amazing tip that should be followed

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so prioritize and learn the most

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important ones first to remember them

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easily pick out the five most important

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ratios and learn them well until they

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stick to your brain

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and last but not least try to create an

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elaborate visual representation of each

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element of the financial ratios in your

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head to learn them easily connect each

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symbol by creating a story to keep them

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all together this will be very helpful

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since our mind's tendency to remember in

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pictures is higher than words or symbols

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with these tips it will only take you 15

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minutes to learn the financial ration

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formulas and store them in your head

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stay tuned to our YouTube channel for

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