Table A2 Financial performance... | Emerald Publishing

Table A2

Financial performance measurement parameters

Ratios	Formula for calculation
1. Current ratio	$\frac{C u r r e n t A s s e t s}{C u r r e n t L i a b i l i t i e s}$
2. Quick ratio	$\frac{C u r r e n t A s s e t s - I n v e n t o r y}{C u r r e n t L i a b i l i t i e s}$
3. Days sales outstanding ratio	$\frac{R e c e i v a b l e s}{S a l e s} X 365$
4. Days purchase outstanding ratio	$\frac{P a y a b l e s}{P o w e r P u r c h a s e} X 365$
5. Total asset turnover ratio	$\frac{S a l e s}{T o t a l A s s e t s}$
6. Non-current asset to net worth ratio	$\frac{N o n - C u r r e n t A s s e t s}{N e t W o r t h}$
7. Current debt-to-net worth ratio	$\frac{C u r r e n t D e b t}{N e t W o r t h}$
8. Debt-equity ratio	$\frac{D e b t}{E q u i t y}$
9. Interest coverage ratio	$\frac{E a r n i n g s B e f o r e I n t e r e s t & T a x}{I n t e r e s t C h a r g e s}$
10. Net profit ratio	$\frac{N e t P r o f i t / L o s s}{S a l e s} X 100$
11. Return on total assets (ROA)	$\frac{N e t P r o f i t / L o s s}{T o t a l A s s e t s} X 100$
12. Return on equity/net worth (ROE)	$\frac{N e t P r o f i t / L o s s}{E q u i t y} X 100$
13. Return on capital employed (ROCE)	$\frac{E a r n i n g s B e f o r e I n t e r e s t & T a x}{Capital Employed} X 100$

Source(s): Table by authors