Income Statement And Balance Sheet Ratios

With the balance sheet and income statement in the example above we can calculate the balance sheet ratios as below.

Income statement and balance sheet ratios. The following trial balance is prepared after preparation of income statement for f. Specifically we will discuss the following. Formulas for both balance sheets and income statements when you can analyze both an income statement and a balance sheet side by side you can calculate several additional financial ratios. Balance sheet and income statement ratios stockholders equity section of the balance sheet 2.

Prepare balance sheet for f. Income statement is one of the financial statements of the company which provides the summary of all the revenues and the expenses over the time period in order to ascertain the profit or loss of the company whereas balance sheet is one of the financial statements of the company which presents the shareholders equity liabilities and the assets of the company at a particular point of time. Financial consultation case study. Abc corporation s most recent balance sheet reported total assets of 10 000 000 and total liabilities of 7 200 000.

Balance sheet ratio indicates relationship between two items of balance sheet or analysis of balance sheet items to interpret company s results on quantitative basis and following balance sheet ratios are financial ratio which include debt to equity ratio liquidity ratios which include cash ratio current ratio quick ratio and efficiency ratios which include account receivable turnover account payable turnover inventory turnover ratio. Financial ratios using amounts from the balance sheet and income statement. In this section we will discuss five financial ratios which use an amount from the balance sheet and an amount from the income statement. Purchases ending inventories beginning inventories cost of goods sold 10 396 8 580 65 500 76 316.

Debt to total assets total liabilities total assets debt to total assets 7 200 000 10 000 000 debt to total assets 0 72 or 72 or 0 72 to 1 or 0 72 1. In the absence of information about the date of repayment of a liability then it may be assumed. Green as at 31 march 2015 in both horizontal and vertical style. Green as at 31 march 2015.

Working capital per dollar of sales working capital total sales receivable turnover net credit sales average net receivables for the period. Preparation of balance sheet horizontal and vertical style. Ratio 10 receivables turnover ratio. For a balance sheet using financial ratios like the debt to equity ratio can provide a good sense of the company s financial condition along with its operational efficiency.