Analytical procedures Flashcards
What type of comparisons are included within analytical procedures?
- Prior periods
- Budgets and forecasts
- Industry information
- Expectations
- Ratio analysis
- Comparing financial and non financial information
How do you calculate return of capital employed?
Profit before interest and tax/ (share capital + reserves + non current liabilities)
How do you calculate net profit margin?
Profit before interest and tax/ revenue
How do you calculate asset turnover?
Revenue/ (share capital + reserves + non current liabilities)
How do you calculate gross profit margin?
Gross profit/ revenue
How do you calculate the current ratio?
Current assets/ current liabilities
How do you calculate the quick ratio?
(Current assets - inventories) / current liabilities
How do you calculate the inventory holding period?
(Inventories x 365 days)/ cost of sales
How do you calculate the receivables collection period?
(Trade receivables x 365 days)/ credit sales
How do you calculate the payables payment period?
(Trade payables x 365 days)/ credit purchases
How to calculate the debt/ equity ratio?
Interest bearing debt/ share capital and reserves
How to calculate interest cover?
Profit before interest and tax/ finance costs
