BU 3.5.2 Ratio analysis Flashcards
1
Q
gearing formula
A
non-current liabilities/capital employed ×100
2
Q
the formula for capital employed
A
NCA(non current asset) + CA(current assest) - CL(current liabilities)
3
Q
does does gearing ratio mean and show
A
gearing ratio looks at the long-term stability of the business and its ability to pay its loans and debts. It also shows how reliant the business is on borrowed money. If the business has a gearing ratio above 50% then you can say that the business is highly geared
4
Q
ROCE formula
A
operating profit/capital employed ×100
5
Q
formula for capital employed
A
NCA(non current asset) + CA(current assets) - CL(current liabilities)
6
Q
what is ROCE and what does it show
A
ROCE is how the money will work while it is in the business,to give you a good return on investment
