RATIOS AND SUGGESTED FORMULAS FOR THE BEST CORPORATE CRITERIA

S.No. 1 Profitability Ratios Profit before tax Gross Markup Income RATIOS SUGGESTED FORMULA

1.1

Profit before tax ratio

1.2

Gross Yield on Earning Assets

Total Interest Income Total Earning Assets

1.3

Gross Spread ratio

Net markup income Gross Markup Income

1.4

Cost / Income ratio

Operating expenses Operating Income

1.5

Return on Equity

Net Income Shareholder's Equity

1.6

Return on Capital employed

___________________Net Income__________________ Average Debt Liabilities + Average Shareholders' Equity

1.7

Gross Profit ratio

Gross Profit Total Revenue

1.8

Net Profit to Sales

Net Profit Total Revenue

1.9

EBITDA Margin to Sales

EBITDA Net Sales

1.10

Operating leverage ratio

% change in EBIT % change in Sales

Evaluation Committee of the Joint Committee of ICAP and ICMAP

S.No. 2 Liquidity Ratios

RATIOS

SUGGESTED FORMULA

2.1

Advances to Deposits ratio

Loans & Advances (Net) Deposits

2.2

Current ratio

Current Assets Current Liabilities

2.3

Quick / Acid test ratio

Current Assets minus Inventories Current Liabilities

2.4

Cash to Current Liabilities

_______Cash_+ Cash Equivalents______ Current Liabilities

2.5

Cash flow from Operations to Sales

Cash flow from operations Sales

3 3.1

Activity / Turnover Ratios Inventory turnover ratio Cost of Goods Sold Average Inventory

3.2

No. of Days in Inventory

Days in Year Inventory Turnover

3.3

Debtor turnover ratio

Total Credit Sales Average Accounts Receivable

3.4

No. of Days in Receivables

Days in Year Debtor Turnover

3.5

Creditor turnover ratio

Net Credit Purchases Average Accounts Payable

3.6

No. of Days in Creditors

Days in Year Creditor Turnover

Evaluation Committee of the Joint Committee of ICAP and ICMAP

S.No.

RATIOS

SUGGESTED FORMULA

3.7

Total Assets turnover ratio

Revenue Total Assets

3.8

Fixed Assets turnover ratio

Revenue Fixed Assets

3.9

Operating Cycle

No. of Days in Inventory + No. of Days in Receivables No. of Days in Creditors

Investment/Market Ratios Net Income after Tax Dividend on Preference Shares Weighted Average Number of Ordinary Shares

4.1

Earnings per share (EPS)

4.2

Price Earnings ratio

Market value of share EPS

4.3

Price to Book ratio

Market value of share Total Assets - Intangible Assets

4.4

Dividend Yield ratio

Annual Dividends Per Ordinary Share Market Price per Share of Ordinary Share

4.5

Dividend Payout ratio

Dividend per Share EPS

4.6

Dividend Cover ratio

EPS-basic Annual total dividend per share

4.7

Break-up Value per share without Surplus on Revaluation of Fixed Assets

Shareholders' Equity - Revaluation Surplus Total Ordinary Shares Outstanding

Evaluation Committee of the Joint Committee of ICAP and ICMAP

S.No.

RATIOS

SUGGESTED FORMULA

4.8

Break-up Value per share including the effect of Surplus on Revaluation of Fixed Assets

Shareholders' Equity Total Ordinary Shares Outstanding

Capital Structure Ratios Tier One Capital + Tier Two Capital Risk Weighted Assets Tier One Capital includes share capital, share premium and accumulated profits. Tier Two Capital includes undisclosed reserves, revaluation reserves, general provisions, hybrid instruments and subordinated term debt

5.1

Capital Adequacy ratio

5.2

Earning assets to total assets ratio

Earning Assets Total Assets

5.3

Weighted average cost of deposit

Interest on Deposits Weighted Average Deposits

5.4

Net assets per share

________Net Assets__________ Number of Shares outstanding

5.5

Financial leverage ratio

_____Total Debt___ Shareholders' Equity

5.6

Weighted average cost of debt

________Interest on Debt ______ Weighted Average Loan Balance

5.7

Debt to Equity ratio

Long-term Debt Shareholders' Equity

5.8

Interest Cover ratio

____EBIT___ Finance Cost

Evaluation Committee of the Joint Committee of ICAP and ICMAP