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Analyst

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Submitted By saroop82
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Q. No 6 . What are the different types of ratios you would use while analyzing the financial statements of a company? Give examples of each of these types. Answer 1:

The different types of financial ratios used in the analyzing financial statements of a company are: 1. Liquidity Ratios 2. Leverage Ratios 3. Turnover Ratio 4. Profitability Ratio 5. Valuation Ratio Let us consider the Profit and Loss A/c and Balance Sheet of OM Enterprises Limited to illustrate the calculation of these ratios

Profit and Loss Account of OM Enterprises Limited for the year ending on March 31, 2006
|PARTICULARS |AMOUNT (Millions) |AMOUNT (Millions) |
|Net Sales | |350 |
|Cost of goods sold | |245 |
|i) Stock |175 | |
|ii) Wages and salaries |30 | |
|iii)Other manufacturing expenses |40 | |
|Grofit profit | |105 |
|Operating Expenses | |60 |
|Depreciation |25 | |
|General Administration |15 | |
|Selling Expenses

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