Balance sheets and ratios Flashcards
Net assets
Non-current assets + current assets – current liabilities – non- current liabilities
Total equity
Share capital + retained profit
Current Ratio
Current Assets ÷ Current Liabilities
Acid Test Ratio/ liquid capital ratio
(Current Assets – Inventories/stock) ÷ Current Liabilities
Capital employed
Non-current liabilities + total equity
Gearing
Non-Current Liabilities ÷ Capital Employed X 100
Return on Capital Employed (ROCE)
Operating Profit ÷ Capital Employed X 100
Working Capital
Current Assets – Current Liabilities
Trade receivables days
(trade receivables / credit sales) x 365
Trade payable days
(trade payables / credit purchases) x 365
Average inventory
(opening inventory + closing inventory) / 2
Inventory turnover days
(average inventory / cost of sales ) x 365
