chapter 9 Flashcards
what are the five categories of standard ratio
profitability
productivity
liquidity
activity/turnover
gearing
what are the main profitability ratios
gross
net
return on capital employed
what is the purpose of the roce ratio
relationship of profit to total capital employed and is seen as giving an indication of how efficiently and effectively management have deployed the resources available to it
why might a business such as a supermarket be able to survive on a current ratio of less than one
they buy goods on credit and sell mainly for cash
what does the gearing ratio measure
borrowings as a percentage of sharholers equity
which ratio would help to establish that an insurance company was receiving enough premium to cover the costs of claims and expenses
combined ratio
measured underwriting performance by combining the loss ratio with the expense and commission ratio
