1. Capital owned = Opening capital + reserves + Net profit - Drawings

It is the net worth of the business and it is the amount business owes to its owners .

2. Capital invested = Opening capital - Drawings

It is the actual amount of money brought in the business by the owner.

3. Working capital = Current assets - current liabilities

It indicates financial strengths of the business, which make trade possible without credit.

4. Working capital ratio = Current assets / Current liabilities

An ideal working capital ratio is 1 and too high working capital ratio indicates idle cash. It is used to show the extent of the business' financial stability.

5. Liquid ratio = Current assets - Stock/Current liabilities

Most financial analysts feel that the liquid ratio must lie between 1 : 1 and 1.5 : 1 for the business to manage comfortably. It gives early warning of the solvency position of the business so that management can take timely decision.

6. Turnover ( Net sales) = gross sales - Returns inwards

Total value of sales in the year.

7. Gross profit = Net sales - Cost of goods sold

This is the overall profit of the business

8. Cost of goods sold = Opening stock + Net purchases - closing stock

9. Net profit = Gross profit + Other income - Expenses

True profit obtained from trading and it represents real gain of a business

10. Expenses = Gross profit - Net profit Gross profit

11. Gross profit Percentage =Gross profit /Turnover x 100%

It shows average profit made from trading.

12. Net profit percentage =Net profit / Turnover x 100%

It shows actual average profit made from business

13. Rate of stock turn =Cost of goods sold / Average stock at cost price

It measures efficiency of the firm compared with a similar firm.The firm with a higher rate of turnover is more efficient .

14. Average stock = (Opening stock + Closing stock) / 2

15. Rate of return on capital invested =Net profit /Opening capital x 100%

If the rate of return on capital invested is lower than the bank deposits it is better to sell off the business and keep the money in the bank.

16. Gross profit as a percentage of cost of goods sold = Gross profit/Cost of goods sold x 100%

It is also known as mark up

17. Gross profit as a percentage of sales =Gross profit /Sales x 100

It is also known as margin.

18. The balance of trade or visible trade = Visible exports - Visible imports

19. The invisible balance = Invisible exports - Invisible imports

20. The balance of payments on current account = (Visible exports + invisible exports) - (visible imports + invisible imports)

Example: Visible exports: Bangladesh exporting garments to Canada.

Invisible exports: Bangladeshi workers working in UAE and sending foreign currency to Bd.

Visible imports: Bangladesh importing cars from Japan.

Invisible imports: Bangladeshi people going abroad and spending foreign currency for treatment and education.

21. Monthly loan repayment = (Capital + interest) / Time

22 . % on ordinary shares =Declared dividend / Initial price of ordinary shares x100%