Few Important Ratios

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The management will always be interested to have the output of these ratios,

1) Current Ratios = Current Assets / Current Liabilities
2) Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities
3) Average Collection Period = Accounts Receivable / Average Daily Sales
4) Inventory Turnover = COGS / Inventory
5) Debt Ratio = Total Liabilities / Total Assets
6) Debt to Equity Ratio = Total Liabilities / Stockholder's Equity
7) Net Profit Margin = Net Profit / Net Sale
Return on Investment (ROI) = Net Profit / Total Assets