Statement Analysis Tools and Accounting Ratios Test - 5

Trade payable turnover ratio is a ratio of credit purchases to average trade creditors. It measures the speed with which a company pays its suppliers. 

working capital turnover ratio is also referred to as net sales to working capital. It shows the company's effectiveness in using its working capital.

Long term funds employed in the business are also known as Capital Employed. i.e. Share capital + Reserves and Surplus + long term borrowings + Long term provisions

Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Liquid ratio is a ratio that measures a company's ability to pay short term and long term obligations. This is done by comparing a company's most liquid assets, those that can be easily converted to cash, with short term obligations.

Net Profit Ratio is the ratio of after tax profits to net sales. It reveals the remaining profit after all costs of production , administration, and financing have been deducted from sales, and income taxes recognized.

Solvency ratio measures a company's ability to meet its long term obligations . in general a solvency ratio measures the size of a company's profitability compared to its obligations

Fictitious Assets (unamortized expenses) are subtracted while calculating capital employed:
i.e. Share Capital + Reserves and Surplus + Long term borrowings – Fictitious Assets

Proprietary ratio is calculated under solvency ratio. i.e. Proprietary Ratio = Proprietors Funds/Total Assets