3.5.2 Ratio Analysis Flashcards
1
Q
Gearing ratio equation
A
(Non-current liabilities / capital employed) x100
2
Q
Return on capital employed equation (ROCE)
A
ROCE = (Operating profit / Capital employed) x 100
3
Q
Gearing ratios
A
Exploration of the capital structure of the business by comparing the proportions of capital raised by debt and equity
4
Q
Profitability or performance ratios
A
Illustration of the relative profitability of a business
5
Q
Ratio analysis
A
A numerical approach to investigating accounts by comparing two related figures
6
Q
Return on capital employed (ROCE)
A
The profit of a business as a percentage of the total amount of money used to generate it.
7
Q
Window dressing
A
The legal manipulation of accounts by a business to present a financial picture that is to its benefit.
8
Q
Limitations of ratio analysis
A
- comparisons over time
- Inter - firm comparisons
- other differences
