Chapter 17 Equations Flashcards
Show the formula to calculate Return on Owner’s Investment.
Return on Owner’s Investment = Net Profit/Average Capital x 100
Show the formula to calculate Return on Assets.
Return on Assets (ROA) = Net Profit/Average Total Assets x 100
Show the formula to calculate Average Capital
Capital at Start + Capital at end/ 2
Show the formula to calculate Asset Turnover.
Asset Turnover (ATO) = Sales/Average Total Assets
Show the formula to calculate the Net Profit Margin.
Net Profit Margin (NPM) = Net Profit /Sales Revenue x 100
Show the formula to calculate the Gross Profit Margin.
Gross Profit Margin (GPM) = Gross Profit/Sales Revenue x 100
Show the formula to calculate the Working Capital Ratio.
Working Capital Ratio (WCR) = Current assets/Current liabilities
Show the formula to calculate the Quick Asset Ratio.
Quick Asset Ratio (QAR) = Current assets (excluding stock and prepaid expenses)/Current liabilities (excluding bank overdraft)
Show the formula to calculate Stock Turnover.
Stock Turnover (STO) = Average stock/Cost of Goods Sold x 365
Show the formula to calculate Debtors Turnover
Debtors Turnover (DTO) = Average debtor/Credit sales x 365
Show the formula to calculate Creditors Turnover.
Creditors Turnover (CTO) = Average creditors/Credit purchases x 365
Show the formula to calculate Debt Ratio
Total Liabilities/ Total Assets x 100
