All Relevant Ratios Calculations Flashcards
How to calculate capital employed?
Shareholder’s equity + long-term debt (NCL) OR Total assets - current liabilities
How to calculate asset turnover?
Revenue / Capital employed
How to calculate return on capital employed?
(PBIT / capital employed) * 100%
What represents net debt? (Interest bearing)
Debentures
Bank loans
Finance/lease liabilities
Current ratio calculation? (X:1)
Current assets / current liabilities
Quick ratio calculation? (X:1)
(Current assets - inventory) / Current liabilities
Inventory holding period calculation?
(Inventory/Cost of sales) * 365 days
How to calculate receivable days (receivables collection period)?
(Receivables/Credit sales) * 365 days
How to calculate payable days (payables payment period)
(Payables/Credit purchase) * 365 days
How to calculate gearing ratio (related to solvency)?
(Debt / (Debt + Equtiy)) * 100
(Interest bearing debt / (Interest bearing debt + equity)) * 100
How to calculate interest cover?
PBIT / Interest payable
How to calculate dividend per share?
Total dividends/Number of shares in issue
How to calculate dividend cover?
PFY/Dividends
How to calculate dividend yield?
(Dividends/Share price) * 100%
How to calculate PE ratio?
Price per share / Earnings per share
How to calculate gross profit margin?
Gross profit / Revenue
How to calculate operating profit margin?
Operating profit / Revenue
Calculate net profit margin from ROCE?
ROCE / asset turnover
As ROCE = net profit margin * asset turnover
How to calculate EPS?
PFY / weighted average number of shares (e.g. number of ordinary shares)
if PFY and asset turnover are present?
PFY = Net profit margin * asset turnover
Calculate net assets turnover?
Revenue / (Equity + debt)
Ways to calculate capital employed?
Debt + equity
Total assets - current liabilities
Loss/profit on disposal (consolidation)?
Proceeds - net assets - carrying amount of goodwill + NCI
Loss/profit on disposal (single entity)?
Proceeds - cost of investment
Positive change in ROCE?
An increase
Positive change in asset turnover?
An increase
Positive change in capital employed?
A decrease
Positive change in profitability ratios?
An increase
Positive change in liquidity ratios?
An increase
Positive change in inventory holding period?
A decrease
Positive change in receivables collection period?
A decrease
Positive change in payables payment period?
An increase
Positive change in gearing?
A decrease
How to find the market price?
It is given in the question
PE ratio increase?
Advantage: Stronger earnings
Disadvantage: Positive change should be speculative
