# Accounting Ratio’s

Accounting ratios formula , advantages and disadvantages with complete accounting ratio analysis. All profitability ratios , liquidity ratios and financial ratios are covered in Accounting Ratio’s category.

## How to find Data for Ratio Analysis

In order to conduct the analysis of financial ratio and to calculate financial ratio of a company we need to acquire data that can be used to conclude specific financial ratios for the company in question. There are a number of ways to acquire

## Sacrifice Ratio

Sacrifice Ratio can be defined as an economic ratio that is used to measure the costs that are associated with the process of slowing the economic growth in order to stabilize or coup up or change the inflation trends. In order to calculate this

## Tangible Common Equity Ratio

Tangible common equity ratio is a financial figure that is used to show financial stability of a bank or some other financial institute. This figure show the amount of loss a bank or other financial institute can bear before the entire stockholder equity is

## Debt Service Coverage Ratio

Debt Service Coverage ratio is a financial term that means the total amount of cash flow that is available to pay off the annual interest and principle payments accumulated on business debt within a certain accounting period. This amount of cash flow also included

Overhead ratio is the ratio that is directly related to the operating expense of the business. Operating expenses are the expenses that occur during the day to day routine of the business. We cannot compare operating expense directly to the operating income of the

## Working Ratio

The working ratio is a financial figure that shows either a business has an ability to cover its ongoing operating expenses within a given accounting period. Working ratio like many other financial ratios indicates the financial health of the business however it mostly yields

## Limitations of Ratio Analysis

Ratio analysis is one of the best tools to build a picture of the financial position of a particular firm. Different entities such as credit analyst, stock analyst and lenders can used the ratio analysis as a tool to find out the financial position

## Defensive Interval Ratio

Defensive interval ratio is a variation of the quick ratio. The ratio uses the same figures used by the quick ratio to determine whether a business has an ability to pay its bills and liabilities. The aim of this ratio is calculate a defensive

## Sales to working Capital Ratio

In order to generate and maintain sales a business needs to invest some of its working capital. This working capital is invested in accounts receivable and the inventory of the business. The accounts payable are offset against these investments. This indicates that there is

## Sales Backlog Ratio

The Sales Backlog Ratio is a financial measurement of the ability of a business to maintain the current level of the sales of the business. This ratio is recorded on the trend line to find out whether the business is able to maintain the

## Net Worth Ratio

Net worth ratio is the ratio that shows the net worth of the investment of an investor made within the company. This ratio depicts the return that the shareholder is going to receive on their investment assuming that all the profit earned by the

## Net Profit Ratio

The Net profit ratio is the financial figure that shows the net profit gained by the business after paying the taxes. It can also be defined as the ratio between after tax profit figure to the net income. The Net Profit Ratio identifies the

## Cash Coverage Ratio

Cash coverage ratio can be defined as the amount of cash available in hand in order to pay the interest expense of the business. This ratio shows the amount of cash in hand that will be paid for the interest expense of the borrower.

## Debt Service Coverage Ratio

The debt service coverage ratio is a ratio that is related to the revenue generating property. This is the measure of ability of the property to generate so many revenues that will generate enough cash to pay all the mortgage payments related to that

## Gross Profit Ratio

Gross profit ratio is the ratio that shows the total amount of profit that will be earned by a company by selling its products and services. The gross profit ratio is the ratio that shows the total profit before subtracting administrative expenses, operational expense

## Interest Coverage Ratio

As the name indicates interest coverage ratio is the ratio that depicts the ability of a company to cover its interest expense. This is the ratio that shows whether a company has an ability of paying interest that is accumulated over the outstanding debt

## Gearing Ratio

Gearing ratio can be defined as the ratio a company’s debt to that of its equity. This is also called as debt to equity ratio. High gearing ratio means that ratio of debt to equity is high and vice versa. Sometimes this ratio is

## Acid Test Ratio

The acid test ratio is a quick indicator of the financial position of a firm. This ratio shows weather a firm has adequate amount of short term assets required to fulfill its short term liabilities without selling its inventory to fulfill short term liabilities.
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