Accounting Flashcards
1
Q
What is the gearing ratio?
A
(Non current liabilities / capital employed) x 100
2
Q
What is the ROCE ratio?
A
(Operating profit / capital employed) x 100
3
Q
How do you calculate gross profit?
A
Revenue - cost of sales
4
Q
How do you calculate operating profit?
A
Gross profit - other operating expenses
5
Q
How do you calculate net profit?
A
Operating profit - interest on loans
6
Q
How do you calculate the current ratio?
A
Current assets / Current liabilities
7
Q
How do you calculate the acid test ratio?
A
Current assets - stock/inventory / current liabilities.
8
Q
What is an advantage of high gearing?
A
Interest payments can be deducted as a business expense.
