Setup Menus in Admin Panel

Ratios Analysis Table

 

Types Ratio Source Formula Narration
Liquidity ratios Current ratio Stat of Finanacial  Position

Stat of Financial Position

Current assets

Current liability

This shows the level of liquidity the client has in his business which can cover short term liabilities as they arise

 

Turnover ratios Inventory Turnover Income Statement

Stat of Fin Pos

COGS

Inventory/Stock

This ratio shows the portion of the inventory/stock that has been sold off already

 

Turnover ratios Inventory Turnover Stat of Fin Pos * x days

Income Statement

Inventory * x  days                             COGS If we need to find out how many days it will take to sell of the stock,

 

Turnover ratios Inventory Turnover Stat of Fin Pos * x days

Income Statement

Inventory+New loan* x days

COGS

If additional loan is given to the client to buy more stock to his business

 

Debt ratios Debt-to-equity ratio

 

Stat of Finanacial  Position

Stat of Financial Position

Total Liability

Equity

 

Shows the percentage level of client’s indebtedness to other formal or informal sources.

 

Debt ratios Future Debt-to-equity Stat of Fin Pos+New Loan

Stat of Fin Pos

Debt + New loan

Equity

 

Shows the percentage level of client’s indebtedness to other formal or informal sources if additional fund must be availed to the client.

 

Profitability ratios

 

Return on sales Income Statement * 100

Income Statement

Profit * 100

Sales

 

It shows the percentage of profit the business has made which can be reinvested into the business or trade with.

 

Repayment ratio

 

Repayment      capacity Income Statement

Income Statement

Monthly instalment

Disposable fund

The above ratio is used to make decisions if a customer is to have access to the loan applied for and the amount that can be availed

 

Sample Exercise

A customer request for loan of 300,000 with monthly repayment of 60,000 monthly for six month. The client’s repayment capacity will be calculated using 50% as the maximum risk buffer. Also calculate the appropriate ratio for the client financial statement.

 

Sample Statement of Financial Position as at 31st Dec 2015         Sample Income Statement as at 31st Dec 2015

Current Assets 1,209,500 Sale 2,500,000
Cash 35,000 COGS 2,125,000
Cash at bank 74,500 Gross profit 375,000
Receivables 350,000 Operational Expenses  

40,000

23,000

30,000

5,000

10,000

2,000

7,000

 

 

 

118,000

Inventory 750,000 -Rent
Fixed assets 1,020,000 -Education
Total Assets 2,229,500 -Clothing
Account payable -Transportation
Short term debt 40,000 -Health
Long term debt -Utilities
Total Liability 40,000 Other Expenses
Equity 2,189,500 Total Operational Expenses
Total Liability + Equity  

2,229,500

  Operational Profit 257,000
      Family expenses 112,000
      Other income
      Disposable fund 145,000

 

Ratios

Current ratio 35,000+74,500+  350,000+750,000

40,000

 

30

Inventory Turnover 2,125,000

750,000

 

2.8

Inventory Turnover 750,000 * 30 days

2,125,000

 

11 Days

Future Inventory Turnover 750,000+ 300,000* 30 days

2,125,000

 

15 Days

Debt-to-equity ratio 40,000

2,189,500

 

2%

Future Debt-to-equity 40,000 + 300,000

2,189,500

 

16%

Return on sales 257,000  * 100

2,500,000

 

11

Repayment capacity 60,000 * 100

145,000

 

41%

 

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