Ratio analysis equations

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Last updated 5:44 PM on 4/29/26
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12 Terms

1
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Gross profit margin % =

gross profit / sales

2
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profit before tax % =

profit before tax / sales

3
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return on capital employed % =

operating profit / (equity + long term borrowings)

4
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return on equity % =

profit after interest and tax / equity

5
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asset turnover =

sales / capital employed

6
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current ratio =

current assets / current liabilities

7
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acid test =

(current assets - inventory) / current liabilities

8
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inventory holding period =

inventory / CoS x 365

9
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receivable collection period =

trade receivables / sales x 365

10
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payable payment period =

trade payables / COS x 365g

11
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gearing ratio =

long and short term borrowing / equity

12
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interest cover =

PBIT / finance cost