Accounting Indicators Flashcards
1
Q
Gross profit margin
A
- Gross profit / net sales *100
- %
- Increase/decrease
2
Q
Net profit margin
A
- Net profit / net sales *100
- %
- Increase/decrease
3
Q
Return on assets
A
- Net profit / avg total assets *100
- %
- Increase/decrease
4
Q
Asset turnover
A
- Net sales / avg total assets
- times/period
- Faster/slower
5
Q
Return on owner’s investment
A
- Net profit / avg capital *100
- %
- Increase/decrease
6
Q
Cash flow cover
A
- Net cash flow (operating) / avg current liabilities
- times/period
- Faster/slower
7
Q
Working capital ratio
A
- Current assets / current liabilities
- Ratio (current assets:1)
- Increase/decrease
8
Q
Quick asset ratio
A
- Current assets (less inventory + prepaid expenses) / current liabilities
- Ratio (quick assets:1)
- Increase/decrease
9
Q
Debt ratio
A
- Total liabilities / total assets *100
- %
- Increase/decrease
10
Q
Inventory turnover
A
- Avg inventory / cost of goods sold *365
- No of days
- Faster/slower
11
Q
Accounts payable turnover
A
- Avg acc payable / net credit purchases + GST *365
- No of days
- Faster/slower
12
Q
Accounts receivable turnover
A
- Avg acc receivable / net credit sales + GST *365
- No of days
- Faster/slower
13
Q
Profitability
A
The ability of of a business to earn a profit as expressed by comparing profit against a base
