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Accounts 4th Year > Accounting Ratios > Flashcards

Accounting Ratios Flashcards

Memorise the equations of Accounting Ratios

1
Q

What are the 4 Accounting Ratios ?

A
  1. Profitability Ratios
  2. Efficiency Ratios
  3. Financial Ratios
  4. Investment Ratios
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2
Q

Profitability Ratio 1

What is the formula for Gross Profit as Percentage of Sales ? and where can it be found ?

A
  • Gross Profit / Sales x 100
  • Profit and Loss Statement
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3
Q

Profitability Ratio 2

What is the formula for Net Profit as Percentage of Sales ? and where can it be found ?

A
  • Operating Profit / Sales x 100
  • Profit and Loss Statement
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4
Q

Profitability Ratios Definitions

How can you calculate Net / Operating Profit ?

A

Operating Profit = Gross Profit - Selling & Distribution - Administration

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5
Q

Profitability Ratios Definition

How can you Calculate Expenses ?

A

Expenses = Selling & Distribution + Administration

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6
Q

Profitability Ratio 3

What is the forumla for Expenses as a percentage of Sales ? And where can it be found ?

A
  • Selling & Distribution + Administration / Sales x 100
  • Profit and Loss Statement
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7
Q

Profitability Ratio 4

What is the formula for Selling & Distribution as a percentage of Sales ? and where can it be found ?

A
  • Selling & Distribution / Sales x 100
  • Profit and Loss Statement

This is part of Expenses

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8
Q

Profitability Ratio Definitions

What are Financial Charges ?

A

Financial Charges = Interest

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9
Q

Profitability Ratio 5

What is the formula for Finance Charges as Percentage of Sales ? and where can it be found ?

A
  • Interest / Sales x 100
  • Profit and Loss Statement
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10
Q

Profitability Ratio 6

What is the formula for Administration as Percentage of Sales ? And where can it be found ?

A
  • Administration / Sales x 1000
  • Profit and Loss Statement
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11
Q

Profitability Ratio Definitions for ROCE

Profit Before Interest = ?
Capital Employed = ?

A
  • Profit Before Interest = Operating Profit
  • Capital Employed = Fixed Assets + Current Assets - Liabilities
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12
Q

Profitability Ratio 7A

What is the formula for Return on Capital Employed (ROCE) ? And where can it be found ?

A
  • Profit Before Interest (Operating Profit) / Fixed + Current Assets - Liabilities (Capital Employed) x 100
  • From Profit & Loss Statement
  • From Balance Sheet
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13
Q

Profitability Ratio 8

What is the formula for Return on Equity ? And where can it be found ?

A
  • Profit Before Tax - Preference Dividend / Ordinary Share Capital + Reserves
  • From Profit & Loss Statement
  • From Balance Sheet
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14
Q

Efficiency Ratio 1

What is the formula for Sales over Capital Employed ? And where can it be found ?

A
  • Sales / Total Assets - Liabilities
  • From Profit & Loss
  • From Balance Sheet
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15
Q

Efficiency Ratios Definitions

Total Assets ?

A

Total Assets = Fixed Assets + Current Assets

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16
Q

Efficiency Ratio 2

What is the formula for Sales over Total Assets ? and where can it be found ?

A
  • Sales / Fixed Assets + Current Assets
  • From Profit and Loss
  • From Balance Sheet
17
Q

Efficiency Ratio 3

What is the formula for Sales over Fixed Assets ?

A
  • Sales / Fixed Assets
    From Profit & Loss
    From Balance Sheet
18
Q

Efficiency Ratio 4

What is the Formula for Sales over Current Assets ?

A
  • Sales / Current Assets
  • From Profit & Loss
  • From Balance Sheet
19
Q

Financial Ratio 1

What is the Formula for the Current Ratio ? And where can it be found ?

A
  • Current Assets / Current Liabilities
  • From the Balance Sheet
20
Q

Financial Ratio 2

What is the formula for Stockturn ? And where can it be found ?

A
  • Opening Stock + Purchases - Closing Stock / Opening Stock + Closing Stock / 2
  • Profit and Loss
21
Q

Financial Ratio 3

What is the formula for the Liquid / Acid Test Ratio ? And where can it be found ?

A
  • Current Assets - Stock / Liabilities
  • From the Balance Sheet
22
Q

Financial Ratio 4

What is the formula for the Debtor’s Ratio ? And where can it be found ?

A
  • Trade Debtors / Total Sales x 365
  • Balance Sheet
  • Profit and Loss
23
Q

Financial Ratio 5

What is the formula for the Creditor’s Ratio ? And where can it be found ?

A
  • Trade Creditors / Purchases x 365
  • Balance Sheet
  • Profit and Loss
24
Q

Investment Ratio 4

What is the formula for Dividend Cover ?

A
  • Profit after tax - preference dividend / Ordinary Dividend
25
Q

Investment Ratio 5

What is the formula for Interest Cover ?

A
  • Operating Profit / Interest Payable
  • Can be found in Profit and Loss statement only
26
Q

Investment Ratio 6

What is the formula for preference share ?

A
  • Ordinary Dividend / Ordinary Share Capital x 100

Accounts 4th Year (5 decks)

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