Kindly, correct me if I am wrong.

Income statement (represents profitability in period of time) Sales (Revenue) Total sales Cost of goods sold (COGS) Gross profit SALES - COGS Depreciation (operational cost) (x) Selling & admin expenses (operational cost) Operating profit (net income) Gross profit - (X+Y) Interest expenses (interest) Earnings before Taxes Operating profit - interest Taxes (TAX) Earnings after Taxes EBT-TAX Ration Analysis Liquidity Ratio: Ability to meet short term immediate obligations Current Ratio (C.R) = Current Assets (C.A) / Current liabilities (C.L) > or = 2 it will be Good Quick Acid test Ratio (Q.R) = Quick Assets (Q.A/Current liabilities (C.L) (Quick assets are Cash, short term investments and Current receivables Acid test ration is the same as current ration excluding inventories and prepaid expenses which are difficult to be quickly converted to cash. Solvency Ratios: Ability to satisfy debt obligations, Debt Ratio = Total liabilities/Total Assets (this ratio measures what portion of a company's assets are contributed by the creditors) Equity ratio = Total Equity / Total Assets (this ratio measures what portion of a company's assets are contributed by the owners) Debt-equity Ratio = Debt Ratio / Equity Ratio =T.L/T.E Profitability Ratios: Ability to manage expenses to produce profit from sales Gross Profit (GP) Margin = (Gross Profit/ Sales) x 100 Operating profit Margin = (Operating profit/Sales) x 100 Net Profit (NP) Margin = (Net profit or income / Sales) x 100 Return on Assets (ROA)= (Net income Assets) x 100 Return on Equity (ROE) = (Net income/Equity) x 100 Efficiency Ratios: To check the efficiency of the company, how many days will it take to sell a product (inventory) Inventory turnover Ratio = COGS /Average inventory Average inventory = (Open stock + close stock)/2 FATR (Fixed Assets turnover Ratio) = Sales / Fixed Assets (FA) DTR (Debit Turnover ratio) = Credit sales / average debtor Debtor collection period = 365 days / DTR