Quality of Earnings Ratio

The quality of income ratio or earnings quality ratio can be used to indicate that the net income of a business demonstrates high quality characteristics such as, for example, being cash backed, predictable, recurring and conservative.

Cash Flow Ratios Calculator

This cash ratios calculator uses operating cash flow instead of net income to calculate three financial ratios. Unlike net income, cash flow is an objective measure of performance which cannot be manipulated or distorted using accounting assumptions and opinions.

Cash Flow Ratio Analysis

Cash flow ratios can be calculated using cash flow from operating activities found in the cash flow statement of a business. Using cash flow avoids the use of net income which is a subjective measure traditionally used in the calculation of accounting ratios.

Days Sales Outstanding

The days sales outstanding shows the average number of days your customers are taking to pay you. It is calculated by dividing average accounts receivables by the daily credit sales.

Operating Leverage Ratio Analysis

The operating leverage shows the level of fixed cost leverage within a business, and the degree of operating leverage shows the impact of the cost structure on the operating income of the business.

The operating income for a business with high leverage can change dramatically for a given change in the number of units sold, and its earnings are said to be more volatile and therefore more risky

Return on Assets ROA

Return on assets or ROA measures the percentage rate of return a business gets on its assets. It is calculated by dividing the earnings before interest and tax by the total assets of the business.

ROCE – Return on Capital Employed

ROCE or return on capital employed measures the percentage rate of return a business gets on its capital employed. It is calculated by dividing the earnings before interest and tax by the total assets less current liabilities of the business.

Inventory Days

The Inventory Days ratio shows the average number of days sales a business is holding in its inventory. It is calculated by dividing inventory by average daily cost of goods sold. It is sometimes called the Stock Days ratio.

Creditor Days Ratio in Accounting

The creditor days ratio shows the average number of days you take to pay your suppliers. It is calculated by dividing creditors by average daily purchases.

Net Profit Ratio

The net profit ratio is the profit after tax of the business expressed as a percentage of the revenue. It is calculated by dividing profit after tax by revenue.
The Net profit ratio is also called Net Margin or Net Profit Margin.

Return on Sales

The return on sales is the operating profit of the business expressed as a percentage of the revenue. It is a measure of the level of true income a business generates on its sales. It is calculated by dividing operating profit by revenue. Operating profit is the same as profit before interest and tax (PBIT), otherwise called earnings before interest and tax (EBIT).