2.1 - Key Ratio Formulas Flashcards
Return on capital employed
Profit before interest and tax / equity + net debt
Return on shareholder’s funds
Net profit for the period / share capital + reserves
Gross profit margin
Gross profit x 100 / Revenue
Cost of sales percentage
Cost of sales x 100 / Revenue
Operating cost percentage
Operating costs x 100 / Revenue
Net margin = operating margin
Profit before interest and tax x 100 / Revenue
Current ratio
Current assets: Current liabilities
Quick ratio
Receivables + current investment + cash : current liabilities
Gearing ratio
Net debt / equity x 100
Interest cover
Profit before interest payable / interest payable
Net asset turnover
Revenue / capital employed
Inventory turnover
Cost of sales / inventories
Inventory days
Average inventory / cost of sales x 365
Trade receivables collection period
Trade receivables x 365 / Revenue
Trade payables payment period
Trade payables x 365 / Credit purchases
