This post lists set of ratios and formulas that can be derived primarily from the income statement. There are several that require additional information from the balance sheet, as well as internal information, such as employee headcount, that may not be readily discernible from published financial statements.

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The general intent of the analysis tools presented here is to show a company’s ability to sustain its sales, the level of asset and expense usage required to do so, and the sustainability of its current sales and expense levels. There are also specialized ratios that deal with such issues as sales returns, repairs and maintenance, fringe benefits, interest expense, and overhead rates.

Each of the following sections describes the uses of a ratio or formula, explains the proper method of calculation, and gives an example. Each section also discusses how each ratio or formula can be misused, skewed, or incorrectly applied.

 

The ratios and formulas presented in this post are:

  1. Sales to Working Capital Ratio Discretionary Cost Ratio
  2. Sales to Fixed Assets Ratio Interest Expense to Debt Ratio
  3. Sales to Administrative Expenses Ratio Foreign Exchange Ratios
  4. Sales to Equity Ratio Overhead Rate
  5. Sales per Person Goodwill to Assets Ratio
  6. Sales Backlog Ratio Overhead to Cost of Sales Ratio
  7. Sales Returns to Gross Sales Ratio Investment Turnover
  8. Repairs and Maintenance Expense to Break-Even Point
  9. Fixed Assets Ratio
  10. Accumulated Depreciation to Fixed Margin of Safety Assets Ratio
  11. Fringe Benefits to Wages and Salaries Tax Rate Percentage Expense
  12. Sales Expenses to Sales Ratio

 

And here is the ratio formulas list:

Asset Utilization Measurement Ratio Formula-1

Asset Utilization Measurement Ratio-2

Asset Utilization Measurement Ratio-3

Asset Utilization Measurement Ratio-4

Assets Utilization Measurement Ratio-5

More measurement ratio formula you may want to know as well:

Operating Performance Measurements (Ratios)

Cash Flow Measurements (Ratios)

Liquidity Measurements (Ratio)

Capital Structure and Solvency Measurements (Ratios)

Return on Investment Measurements (Ratios)

Market Performance Measurements (Ratios)

Measurements and Ratios For Financial and Accounting Department

Measurements and Ratios For Engineering Department

Measurements and Ratios For Logistics Department

Measurements and Ratios For Production Department

Measurements and Ratios For Sales Departments