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DISCOVER

Budgetary, Costing Equations

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Published in: Costing
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Budgetary costing equations

Mitesh P / Ahmedabad

5 years of teaching experience

Qualification: B.Com (GUJARAT UNIVERSITY - 2007), M.Com (GUJARAT UNIVERSITY - 2012), B.Ed (GUJARAT UNIVERSITY - 2013)

Teaches: All Subjects, Hindi, Mathematics, Science, EVS, IT & Computer Subjects, English, School Level Computer, Physics

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  1. 1) Current Ratio [C.R.] = 2) Acid Test Ratio [ATR] = Current Assets Current Liabilities Quick or Liquid Assets Quick or Liquid Liabilities CA CL 3) Absolute Liquidity Ratio [ALR] = 4) Inventory Turnover Ratio [ITR] = 5) Debtors Turnover Ratio [DTR] = 6) Debts to Equity Ratio [DER] = 7) Debts to Total Capital Ratio [DTCR] = OR 8) Interest Coverage Ration [ICR] = 9) Dividend Coverage Ratio [DCR] = 10) Total Coverage Ratio [TCR] = 11) Gross Profit Ratio [G/P Ratio] = 12) Net Profit Ratio [N/P Ratio] = 13) Specific Expenses Ratio [SER] = Super Quick Current Assets Quick Current Liabilities Cost of Goods Sold Average Inventory Trade Debtors Sales per Day Sales per Day = LEVERAGE RATIO Net Sales Closing Inventory Trade Debtors X Nos. of Working Days External Equities Internal Equities Long-term Debts Permanent Capital Total Debts OR OR Net Sales Net Sales Nos. of Working Days Outsiders Funds Shareholders Funds Total Debts Total Assets Long-term Debts OR Shareholders Equity OR Total Shareholder's Equity Total Assets Permanent Capital + C.L. COVERAGE RATIO Earnings Before Interest and Taxes (EBIT) Fixed Interest Earnings After Taxes (EAT) Preference Dividend Earnings Before Interest and Taxes (EBIT) Total Fixed Charges PROFITABILITY RATIO Gross Profit x 100 Net Sales Net Profit x 100 Net Sales EXPENSES RATIO Specific Operating Expenses Sa les Sales (-) Cost of Goods Sold x 100 Sales Cost of Goods Sold + Other Operating Exps 14) Operating Ratio [OR] = Sales Cost of Goods Sold 15) Cost of Goods Sold Ratio [CGSR] = Sales Ratio Analysis/Page - 1
  2. TURNOVER ON INVESTMENT RATIO 16) Return on Assets [ROA] = Net Profit After Tax OR Total Assets Net Profit After Tax + Interest Total Assets Net Profit After Tax + Interest (-) Tax Savings OR OR 17) Return on Capital Employed = OR 18) Return on Shareholder's Equity = Total Assets Net Profit After Tax + Interest Tangible Assets Net Profit After Tax + Interest OR Fixed Assets Net Profit After Tax Capital Employed OR Net Profit After Tax + Interest Capital Employed Net Profit After Tax + Interest Capital Employed (-) Intangible Assets Net Profit After Taxes Total Shareholders Equity OR Net Profit After Tax + Pref. Dividend Equity Capital Net Profit Available for Equity Shareholders 19) Earning Per Share Number of Equity Shares Net Profit Available for Equity Shareholders After Interest & Pref. Dividend 20) Dividend Per Share Number of Equity Shares Dividend paid to Equity Shareholders 21) Dividend Pay Out (D/P) Ratio Total Net Profit Belonging to Equity Holders Dividend Per Share (DPS) OR Earnings Per Share (EPS) Profit Earned per Share 22) Earnings Yield Ratio Market Value per Share Dividend Earned Per Share 23) Dividend Yield Ratio Market Value Per Share 24) Fixed Assets Turnover Ratio 25) Working Capital Turnover Ratio 26) Total Assets Turnover Ratio 27) Fixed Assets Turnover Ratio 28) Current Assets Turnover Ratio 29) Capital Turnover Ratio Net Sales Fixed Assets Net Sales Net Working Capital ASSETS TURNOVER RATIO Cost of Goods Sold + Net Sales Total Assets Cost of Goods Sold + Net Sales Fixed Assets Cost of Goods Sold + Net Sales Current Assets Cost of Goods Sold + Net Sales Capital Employed Ratio Analysis/Page - 2
  3. 3) P/v Ratio= 4) Variable Cost = 1) Contribution (C) = Selling Price - Variable Cost 2) Marginal Cost Equation = S =V-F ± P/ 1 - SX(I-P/V Ratio) OR OR x 100 C=S-V QB + F.c.) OR C X P/V)-F.C. S-V=F+p OR s-v=c c x 100 s OR s Changes in Profit Changes in Sales Sales X P/V Ratio OR Sales 5) Sales To Earn Desired Profit = 6) Total Sale = 1 - P/v B.E. Sales + MOS 7) Number of Unit Sold = 8) Desired Sales to Maintain Same Contribution 9) Desired Profit = Contribution Old Contribution New Contribution Differential Cost OR Differential Units 100% -P/v X New Sales OR P/v Ratio COMPUTATION OF B.E.P. Fixed Cost 10) BEP Units = Contribution per unit c OR X Selling Price Fixed Cost X Selling Price per Unit OR OR 1- Changes In Contribution Changes in Sales v.c. I-P/v Ratio Fixed Cost Variable Cost Selling Price Per Unit Fixed Cost 11) BEP (Sale / value) OR OR 12) Capacity at BEP Fixed Cost Contribution Fixed Cost X Total Sales Contribution Fixed Cost X Sales Sales - Variable Cost Fixed Cost Marginal Contribution BEP Sales Total Sales OR Fixed Cost P/v Ratio X Sales Fixed Cost + Net Profit Sales - Variable Cost = Fixed Cost + Profit X Sales x 100 OR Sales - Margin of Safety Marginal Costing/Page - 3
  4. 13) If other Income & Expenditures taken into account then BEP Sales Fixed Cost - Other Income 1 - Variable Cost + Sales 14) Fixed Cost = BEP sales X P/v Ratio 15) Margin of Safety WHEN F.C. and V. C. is not give Profit OR P/v Ratio Total Sales - BEP Sales 16) Profit P/V Ratio X Margin of Safety 16) Rate of Return On Investment = Return x 100 Investment (Present F.C.+Additional F. C.+ Current ROI + New ROI) 17) Expected Rate of Return on Investment Marginal Costing/Page - 4 P/v Ratio

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