Chapter 16 Performance mngmnt

Question 1

ROCE

Answer 1

operating profit ÷ capital employed

Question 2

ROS

Answer 2

operating profit ÷ revenue

Question 3

Asset turnover

Answer 3

revenue ÷ capital employed

Question 4

ROCE =

Answer 4

ROS + Asset turnover

Question 5

Gross margin

Answer 5

gross profit ÷ revenue

Question 6

capital employed

Answer 6

non current liabilities + total equity

Question 7

current ratio

Answer 7

current assets ÷ current liabilities

Question 8

acid test

Answer 8

cur assets - inventory ÷ cur liabilities

Question 9

inventory holding period

Answer 9

inventory ÷ cost of sales x 365

Question 10

receivables collection period

Answer 10

receivables ÷ credit sales x 365

Question 11

payables payment period

Answer 11

payables ÷ credit purchase x 365

Question 12

capital gearing (leverage)

Answer 12

non cur liabilities(debt) ÷ ordinary shareholder funds(equity)
or non cur liabilities ÷ ordinary shareholders funds(debt + equity)

Question 13

interest cover (income gearing)

Answer 13

operating profit ÷ finance cost

Question 14

ROI

Answer 14

controllable profit ÷ controllable capital employed x 100

Question 15

RI (residual income)

Answer 15

controllable profit - notional interest on capital

Question 16

production-volume ratio

Answer 16

actual output measured in standard hours ÷ budgeted producation hours x 100

Question 17

capacity ratio

Answer 17

actual production hours worked ÷ budgeted production hours x 100

Question 18

efficiency ratio

Answer 18

actual output measured in standard hours ÷ actual production hours x 100