accounting ratios Flashcards
gross profit margin
(gross profit/revenue)x100
gross profit
revenue - cost of sales
operating profit margin
(operating profit/revenue)x100
operating profit
gross profit - other operating expenses
profit for the year (net profit) margin
(profit for the year (net profit)/revenue)x100
profit for the year (net profit)
operating profit - interests and costs
current ratio
current assets/current liabilities
acid test ratio (liquid capital ratio)
current assets - inventory/current liabilities
net assets
current liabilities + non-current liabilities - current liabilities - non-current liabilities
capital employed
non-current liabilities + total equity
gearing ratio
(non-current liabilities/capital employed)x100
return on capital employed (ROCE)
(operating profit/capital employed)x100
revenue
selling price x number of units sold
variable cost
cost per unit x number of units sold
total costs
fixed costs + variable costs
profit
total revenue - total costs
or
total contribution - fixed costs
expected value of a decision with two possible outcomes
[payoff of A x probability of A] x [payoff of B x probability of B]
net gain
expect value - initial cost of decision
market growth
(change in market size over a period of time/original size of market)x100
market share
(sales of one product or brand or business/total sales in the market)x100
added value
sales revenue - costs of brought in goods and services
labour productivity
number of output produced in a period of time/number of employees
unit costs (average costs)
total costs/number of units of output
capacity utilisation
(actual output/maximum possible output)x100
return on investment
(profit from the investment/cost of the investment)x100
variance
budgeted figure - actual figure
contribution per unit
selling price - variable cost per unit
total contribution per unit
contribution per unit x number of output sold
or
total revenue - total variable costs
break-even output
fixed costs/contribution per unit
margin of safety
actual level of output - break-even level of output
labour turnover
(number of staff leaving/number of staff employed by the business)x100
employee retention
(number of employees remained at a certain time period/number of employees employed by the business at the start of the time period)x100
employee costs as percentage turnover
(employee costs/turnover)x100
labour cost per unit
labour costs/number of unit of output
payable days
(payables/cost of sales)x365
receivable days
(receivables/revenue)x365
average rate of return (ARR)
(average annual return/initial cost of project)x100
price elasticity of demand (PED)
(% change in demand/% change in price)x100
income elasticity of demand (YED)
(% change in demand/% change in income)x100
net cash flow
total inflows - total outflows
sales volume
total number of units sold/time
absenteeism
(total staff absent on a day/total employed on a day)x100
total equity
share capital + retained profit + any other reserves
average sales per month
total sales/number of months
simple payback
initial invested/annual payback
average annual return
total profit of investment/number of years of investment
net present value (NPV)
discount factor x cash flow
net assets
non current assets + (working capital - non current liabilities)
assets employed
non-current assets + working capital
expected profit
profit x probability
