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business A2 theme 3 key terms > accounting ratios > Flashcards

accounting ratios Flashcards

1
Q

gross profit margin

A

(gross profit/revenue)x100

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2
Q

gross profit

A

revenue - cost of sales

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3
Q

operating profit margin

A

(operating profit/revenue)x100

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4
Q

operating profit

A

gross profit - other operating expenses

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5
Q

profit for the year (net profit) margin

A

(profit for the year (net profit)/revenue)x100

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6
Q

profit for the year (net profit)

A

operating profit - interests and costs

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7
Q

current ratio

A

current assets/current liabilities

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8
Q

acid test ratio (liquid capital ratio)

A

current assets - inventory/current liabilities

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9
Q

net assets

A

current liabilities + non-current liabilities - current liabilities - non-current liabilities

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10
Q

capital employed

A

non-current liabilities + total equity

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11
Q

gearing ratio

A

(non-current liabilities/capital employed)x100

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12
Q

return on capital employed (ROCE)

A

(operating profit/capital employed)x100

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13
Q

revenue

A

selling price x number of units sold

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14
Q

variable cost

A

cost per unit x number of units sold

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15
Q

total costs

A

fixed costs + variable costs

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16
Q

profit

A

total revenue - total costs
or
total contribution - fixed costs

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17
Q

expected value of a decision with two possible outcomes

A

[payoff of A x probability of A] x [payoff of B x probability of B]

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18
Q

net gain

A

expect value - initial cost of decision

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19
Q

market growth

A

(change in market size over a period of time/original size of market)x100

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20
Q

market share

A

(sales of one product or brand or business/total sales in the market)x100

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21
Q

added value

A

sales revenue - costs of brought in goods and services

22
Q

labour productivity

A

number of output produced in a period of time/number of employees

23
Q

unit costs (average costs)

A

total costs/number of units of output

24
Q

capacity utilisation

A

(actual output/maximum possible output)x100

25
Q

return on investment

A

(profit from the investment/cost of the investment)x100

26
Q

variance

A

budgeted figure - actual figure

27
Q

contribution per unit

A

selling price - variable cost per unit

28
Q

total contribution per unit

A

contribution per unit x number of output sold
or
total revenue - total variable costs

29
Q

break-even output

A

fixed costs/contribution per unit

30
Q

margin of safety

A

actual level of output - break-even level of output

31
Q

labour turnover

A

(number of staff leaving/number of staff employed by the business)x100

32
Q

employee retention

A

(number of employees remained at a certain time period/number of employees employed by the business at the start of the time period)x100

33
Q

employee costs as percentage turnover

A

(employee costs/turnover)x100

34
Q

labour cost per unit

A

labour costs/number of unit of output

35
Q

payable days

A

(payables/cost of sales)x365

36
Q

receivable days

A

(receivables/revenue)x365

37
Q

average rate of return (ARR)

A

(average annual return/initial cost of project)x100

38
Q

price elasticity of demand (PED)

A

(% change in demand/% change in price)x100

39
Q

income elasticity of demand (YED)

A

(% change in demand/% change in income)x100

40
Q

net cash flow

A

total inflows - total outflows

41
Q

sales volume

A

total number of units sold/time

42
Q

absenteeism

A

(total staff absent on a day/total employed on a day)x100

43
Q

total equity

A

share capital + retained profit + any other reserves

44
Q

average sales per month

A

total sales/number of months

45
Q

simple payback

A

initial invested/annual payback

46
Q

average annual return

A

total profit of investment/number of years of investment

47
Q

net present value (NPV)

A

discount factor x cash flow

48
Q

net assets

A

non current assets + (working capital - non current liabilities)

49
Q

assets employed

A

non-current assets + working capital

50
Q

expected profit

A

profit x probability

business A2 theme 3 key terms (9 decks)

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