#2 Ratio Analysis [Activity & Profitability Ratios] ~ Concept behind formation of a Formula

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Described the concept, reason and logic behind formation of different formulas of analysis of financial statements. I have discussed the core concept of contents used in the following formulas: Stock Turnover Ratio, Debtors Turnover Ratio, Creditors Turnover Ratio, Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio and Operating Expense Ratio
Further discussed concept of Cost of Goods Sold, Average Accounts Receivable and Average Accounts Payable so that student need not to remember formula to solve any question
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