In this paper there is a worked example based on the Balance Sheet in Paper 005-025 explaining the calculation of various Balance Sheet ratios. These ratios are very important to the sound financial management of the business and include:
- current ratio
- working capital
- fixed assets as a percentage of total assets
- owner's funds as a percentage of total assets
- quick or acid test ratio
- return on assets pre tax
- return on equity pre tax
- debtors' ratio
- days debtors outstanding
- creditors' ratio
- days creditors outstanding
- debt to equity percentage
- times interest covered
