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Schedule III Ratio calculator.

Compute the 11 ratios mandated under Additional Regulatory Information in the amended Schedule III — current vs prior year, with the >25% variance flag that triggers a mandatory explanation in the notes.

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Components (₹ in lakh)

Balance sheet components

Current yrPrior yr

Current assets

Total current assets per Schedule III

Current liabilities

Total current liabilities per Schedule III

Total debt

All borrowings (non-current + current, incl. current maturities) + lease liabilities

Average shareholders’ equity

Share capital + other equity / reserves. ICAI GN uses averages for ROE — use closing if that is your disclosed basis

Deferred tax liability

For capital employed in ROCE (ICAI GN construction)

Average inventory

(Opening + closing) / 2

Average trade receivables

(Opening + closing) / 2

Average trade payables

(Opening + closing) / 2

Average invested funds

Time-weighted average investments, for ROI

P&L components

Current yrPrior yr

Revenue from operations (net sales)

Also used as net credit sales — adjust if a material share is cash sales

Cost of goods sold

For inventory turnover

Net credit purchases

For trade payables turnover

Net profit after tax

Profit for the year

Tax expense

Current + deferred — to build EBIT for ROCE

Finance cost / interest

Interest charged to P&L

Depreciation & other non-cash operating expenses

Added back for DSCR earnings

Preference dividend

Deducted from PAT for ROE; enter 0 if none

Income generated from investments

For ROI

Debt service

Current yrPrior yr

Principal + lease repayments during the year

Interest is added automatically from finance cost

1 ratio moved > 25%Schedule III requires an explanation in the notes for each ratio that changed by more than 25% versus the preceding year.

The 11 ratios — disclosure table

Ratio	Current yr	Prior yr	Change	Flag
(a) Current ratio	2.00x	1.83x	+9.5%	–
(b) Debt-equity ratio	0.50x	0.81x	-38.5%	Explain
(c) Debt service coverage ratio	2.73x	2.25x	+21.1%	–
(d) Return on equity	23.33%	22.50%	+3.7%	–
(e) Inventory turnover ratio	5.14x	4.92x	+4.5%	–
(f) Trade receivables turnover ratio	6.12x	6.57x	-6.9%	–
(g) Trade payables turnover ratio	6.80x	6.35x	+7.0%	–
(h) Net capital turnover ratio	4.33x	4.84x	-10.5%	–
(i) Net profit ratio	8.08%	7.83%	+3.2%	–
(j) Return on capital employed	23.73%	21.32%	+11.3%	–
(k) Return on investment	7.00%	6.50%	+7.7%	–

Tap a row for the prescribed numerator / denominator. The MCA amendment names the ratios and requires the company to disclose the items included in numerator and denominator — the constructions here follow the ICAI Guidance Note on Schedule III.

Where this lives in the audit

Ratio disclosure should be an output of classification, not a spreadsheet ritual.

CORAA computes Schedule III ratios straight from the mapped trial balance — with prior-year comparison and variance narratives drafted for the notes — so ratio disclosure is a review step,

Keep going

The Schedule III disclosure suite.

Try CORAA Studio More tools

Working the rest of the note? Pair this with the trade receivables ageing analyzer and the cash flow statement builder.

How the Schedule III ratio disclosure works

The MCA amended Schedule III of the Companies Act 2013 by notification G.S.R. 207(E) dated 24 March 2021, effective for financial statements from FY 2021-22. Under "Additional Regulatory Information", every company must disclose 11 ratios: (a) current ratio, (b) debt-equity ratio, (c) debt service coverage ratio, (d) return on equity, (e) inventory turnover ratio, (f) trade receivables turnover ratio, (g) trade payables turnover ratio, (h) net capital turnover ratio, (i) net profit ratio, (j) return on capital employed, and (k) return on investment.

The notification itself names the ratios but does not prescribe formulas — instead it requires the company to explain the items included in the numerator and denominator for computing each ratio. The formula constructions used by this calculator follow the ICAI Guidance Note on Schedule III (issued separately for Division I and Division II companies), which is the profession’s reference construction. A company may adopt a different defensible construction, but it must then disclose that construction and apply it consistently.

The disclosure also carries a variance trigger: wherever a ratio changes by more than 25% compared to the preceding year, the company must give an explanation for the change in the notes. This calculator computes both years side by side, works out the percentage change, and flags every ratio crossing the 25% threshold so the explanation list is ready before the notes are drafted.

Worked example — deleveraging flags debt-equity

A company repays term debt during the year: total debt falls from ₹13 cr to ₹9 cr while average shareholders’ equity grows from ₹16 cr to ₹18 cr.

Inputs

Total debt (CY / PY)₹9 cr / ₹13 cr

Shareholders’ equity (CY / PY)₹18 cr / ₹16 cr

Debt-equity ratio (CY)0.50x

Debt-equity ratio (PY)0.81x

Output

Change vs preceding year−38.5%

>25% variance flagYes — explanation required

Draft explanationRepayment of term loan of ₹4 cr during the year

The ratio moved by more than 25%, so Schedule III requires an explanation in the notes even though the movement is favourable. The direction of the change is irrelevant — the 25% test is on magnitude. A one-line reason tied to the underlying transaction (here, the term-loan repayment) satisfies the requirement.

Common mistakes

Treating the ICAI formulas as statutory

The MCA notification names the 11 ratios and requires disclosure of numerator / denominator items — it does not prescribe formulas. The ICAI Guidance Note constructions (used here) are the reference, but a company using a different construction must disclose it and stay consistent year to year. Switching constructions to avoid a >25% flag is exactly what a reviewer looks for.

Forgetting that favourable swings also need explaining

The >25% test is directionless. A ratio that improved by 40% needs an explanation just as much as one that deteriorated — the requirement is about explaining change, not excusing weakness.

Using closing balances where the GN uses averages

ROE, inventory turnover, receivables turnover and payables turnover use average balances under the ICAI construction. Mixing closing balances into one year and averages into another manufactures spurious variances that then need explaining.

DSCR denominator missing lease and current-maturity repayments

Debt service includes interest and lease payments plus principal repayments of all borrowings during the year — including current maturities of long-term debt. Leaving repayments out inflates DSCR and understates the leverage story the CARO clause (xix) / going-concern review reads from the same numbers.

Reporting a net capital turnover ratio on negative working capital

When current liabilities exceed current assets the ratio flips sign and becomes meaningless. Disclose the negative working capital position and the fact that the ratio is not meaningful rather than printing a negative multiple.

Frequently asked questions

Which ratios must be disclosed under Schedule III?+

Eleven: current ratio, debt-equity ratio, debt service coverage ratio, return on equity, inventory turnover ratio, trade receivables turnover ratio, trade payables turnover ratio, net capital turnover ratio, net profit ratio, return on capital employed, and return on investment. The list applies to both Division I (AS) and Division II (Ind AS) companies; Division III (NBFC) companies have a shorter, sector-specific list.

Does the MCA prescribe the formulas for the 11 ratios?+

No. The amendment names the ratios and requires the company to explain the items included in the numerator and denominator for each. The ICAI Guidance Note on Schedule III supplies the reference constructions most companies follow — e.g. DSCR = earnings available for debt service (PAT + non-cash operating expenses + interest) over debt service (interest & lease payments + principal repayments).

When is an explanation for a ratio change required?+

Whenever a ratio changes by more than 25% as compared to the preceding financial year, the company must explain the change in the notes. The test is on the percentage change in the ratio itself, in either direction.

From when does the ratio disclosure apply?+

The Schedule III amendment applies to financial statements for financial years commencing on or after 1 April 2021 (FY 2021-22 onwards), for all companies preparing Schedule III financial statements.

Is the auditor responsible for the ratio disclosure?+

The disclosure is management’s, but the auditor reports on the financial statements including these notes, and CARO 2020 clause (xix) separately requires the auditor to opine — on the basis of financial ratios, ageing and expected realisation — whether the company can meet its liabilities as they fall due. Inconsistent or unexplained ratio movements surface in both places.

Do the 11 ratios apply to NBFCs?+

Division III of Schedule III (for NBFCs) prescribes a different, shorter set — capital to risk-weighted assets ratio (CRAR), Tier I and Tier II capital and liquidity coverage ratio, as applicable per RBI norms — rather than the 11-ratio list. Verify against Division III and applicable RBI directions.

What if a denominator is zero or negative?+

The ratio is not meaningful. Disclose the underlying position (e.g. negative net worth or negative working capital) and state that the ratio is not determinable / not meaningful, rather than presenting an arithmetic artefact.

Authoritative sources

MCA

Schedule III amendment — MCA notification G.S.R. 207(E) dated 24 March 2021 — Inserts the 11-ratio disclosure and the >25% variance explanation requirement under Additional Regulatory Information, effective FY 2021-22.

ICAI

ICAI Guidance Note on Division II — Ind AS Schedule III (Revised) — Supplies the reference numerator / denominator constructions for each of the 11 ratios; a parallel Guidance Note covers Division I (AS) companies.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

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Trade receivables ageing analyzer →Cash flow statement builder →Net worth calculator →Schedule III mapping validator →ECL (Ind AS 109) calculator →

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Last reviewed: 2026-07-29 · For informational purposes only — not professional advice.