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Accounting > Accounting Ratios > Flashcards

Accounting Ratios Flashcards

1
Q

Return on equity (ROE)

A

Profit available to ordinary shareholders / average ordinary shareholders’ equity

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2
Q

ROA

A

EBIT / Average Total Assets

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3
Q

Gross profit margin

A

Gross profit / sales revenue

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4
Q

EBIT profit margin

A

EBIT / sales revenue

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5
Q

Expense ratios

A

selling and marketing expenses / sales revenue

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6
Q

cash flow to sale ratio

A

net operating cash flow / sales revenue

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7
Q

Asset turnover (ATO)

A

sales revenue / average total assets

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8
Q

link between profitability and efficiency ratios

A

Profit margin x asset turnover = return on assets

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9
Q

days inventory

A

Average inventory x 356 / cost of sales

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10
Q

days sales outstanding

A

average trade receivables x 365 / sales revenue

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11
Q

days purchases outstanding

A

average trade payables x 365 / cost of sales + net increase in inventory)

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12
Q

Current ratio (working capital ratio)

A

current assets / current liabilities

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13
Q

quick ratio (acid-text ratio)

A

cash + receivables / current liabilities - overdrafts

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14
Q

cash flow ratio

A

net operating flow / current liabilities

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15
Q

debt ratio

A

total liabilities / total assets

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16
Q

interest coverage ratio

A

EBIT / finance costs

17
Q

debt coverage ratio

A

non-current liabilities / net operating cash flow

18
Q

earnings per share (EPS) or diluted EPS

A

profit available to ordinary shareholders (or net operating cash flow) / WAVE no. of ordinary shares on issue

19
Q

dividend payout ratio (2)

A

dividends / profit (or) dividends per share / earnings per share

20
Q

price earnings ratio (P/E ratio or PER)

A

current market price / earnings per share

21
Q

net tangible asset backing per share (NTAB)

A

net assets - intangibles / WAVE no. of ordinary shares on issue

22
Q

inventory turnover

A

cost of sales / average inventory

Accounting (7 decks)

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