Accounting Ratios Flashcards
Return on equity (ROE)
Profit available to ordinary shareholders / average ordinary shareholders’ equity
ROA
EBIT / Average Total Assets
Gross profit margin
Gross profit / sales revenue
EBIT profit margin
EBIT / sales revenue
Expense ratios
selling and marketing expenses / sales revenue
cash flow to sale ratio
net operating cash flow / sales revenue
Asset turnover (ATO)
sales revenue / average total assets
link between profitability and efficiency ratios
Profit margin x asset turnover = return on assets
days inventory
Average inventory x 356 / cost of sales
days sales outstanding
average trade receivables x 365 / sales revenue
days purchases outstanding
average trade payables x 365 / cost of sales + net increase in inventory)
Current ratio (working capital ratio)
current assets / current liabilities
quick ratio (acid-text ratio)
cash + receivables / current liabilities - overdrafts
cash flow ratio
net operating flow / current liabilities
debt ratio
total liabilities / total assets
interest coverage ratio
EBIT / finance costs
debt coverage ratio
non-current liabilities / net operating cash flow
earnings per share (EPS) or diluted EPS
profit available to ordinary shareholders (or net operating cash flow) / WAVE no. of ordinary shares on issue
dividend payout ratio (2)
dividends / profit (or) dividends per share / earnings per share
price earnings ratio (P/E ratio or PER)
current market price / earnings per share
net tangible asset backing per share (NTAB)
net assets - intangibles / WAVE no. of ordinary shares on issue
inventory turnover
cost of sales / average inventory
