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.
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:
- Sales to Working Capital Ratio Discretionary Cost Ratio
- Sales to Fixed Assets Ratio Interest Expense to Debt Ratio
- Sales to Administrative Expenses Ratio Foreign Exchange Ratios
- Sales to Equity Ratio Overhead Rate
- Sales per Person Goodwill to Assets Ratio
- Sales Backlog Ratio Overhead to Cost of Sales Ratio
- Sales Returns to Gross Sales Ratio Investment Turnover
- Repairs and Maintenance Expense to Break-Even Point
- Fixed Assets Ratio
- Accumulated Depreciation to Fixed Margin of Safety Assets Ratio
- Fringe Benefits to Wages and Salaries Tax Rate Percentage Expense
- Sales Expenses to Sales Ratio
And here is the ratio formulas list:
More measurement ratio formula you may want to know as well: