Liquidity Ratios: Solvency Debt To Asset Ratio (DAR) DAR Is A Debt Ratio Used To
Liquidity Ratios: Solvency Debt To Asset Ratio (DAR) DAR Is A Debt Ratio Used To
Liquidity Ratios: Solvency Debt To Asset Ratio (DAR) DAR Is A Debt Ratio Used To
The current Ratio is the ratio to measure the company's ability to pay
short-term obligations or debt that is due. The calculation of the current
ratio is done by comparing the total current assets with the total
current debt.
The formula for the current ratio is as follows: CR = 𝑡𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝑡𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑥 100% =… ..%
The DAR formula is as follows: DAR = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑚𝑜𝑢𝑛 𝑜𝑓 𝐷𝑒𝑏𝑡 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 x
100% = .....% )
Profitability Return On Asset (ROA) ROA is the ratio to measure net
profit after tax to total assets. This ratio shows the level of efficiency of
asset management by the company. The greater the ROA, the greater
the level of profit and the better the company's position in terms of asset
use.
The ROA formula is as follows: ROA = 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 𝑥 100% =
…….%
Formula
We can go one step further and calculate the average number of days of receivables
outstanding. The formula is:
The result will indicate, on average, how many days a company is collecting its bills.
Inventory Turnover
The inventory turnover ratio measures how efficiently a company manages its
inventory. The formula for inventory turnover is:
Formula
Formula
The result will indicate the average number of days a company pays its
suppliers.
Formula
Formula