Component 3: ratios

Question 1

return on total assets?

Answer 1

(operating profit + investment income)/ average total assets x 100 = %

Question 2

return on equity?

Answer 2

(operating profit + investment income - finance cost)/ average equity x 100 = %

Question 3

cost of debt?

Answer 3

finance costs/ average debt capital x 100 = %

Question 4

return on finanacial assets?

Answer 4

investment income/ average financial assets x 100 = %

Question 5

gross profit margin?

Answer 5

gross profit/ revenue x 100 = %

Question 6

operating profit margin?

Answer 6

operating profit/ revenue x 100 = %

Question 7

EBIT-margin?

Answer 7

(profit before tax + finance costs)/ revenue x 100 = %

Question 8

net profit margin?

Answer 8

profit after tax/ revenue x 100 = %

Question 9

current ratio?

Answer 9

current assets/ current liabilities

Question 10

acid test ratio?

Answer 10

(current assets - inventory - prepayments)/ current liabilities

Question 11

turnover ratio of current assets?

Answer 11

net revenue/ average current assets = …times

Question 12

turnover time of current assets?

Answer 12

average current assets/ net revenue x 360 = …days

Question 13

turnover ratio of PPE?

Answer 13

net revenue/ average PPE @ carrying value = …times

Question 14

turnover time of PPE?

Answer 14

average PPE @ carrying value/ net revenue x 360 = …days

Question 15

turnover ratio of trade receivables?

Answer 15

credit revenue/ average trade receivables = …times

Question 16

turnover time of trade receivables?

Answer 16

average trade receivables/ credit revenue x 360 = …days

Question 17

turnover ratio of inventory?

Answer 17

cost of sales/ average inventory = …times

Question 18

turnover time of inventory?

Answer 18

average inventory/ cost of sales x 360 = …days

Question 19

debt-to-asset ratio?

Answer 19

debt capital/ total assets x 100 = %

or

debt capital/ total capital x 100 = %

Question 20

finance cost coverage?

Answer 20

(profit before finance cost and tax)/ finance cost = …times

Question 21

ordinary dividend coverage?

Answer 21

earnings per share/ dividend per share = …times

or

(profit after tax - preference share dividends)/ ordinary dividends declared = …times

or

earnings yield/ dividend yield = …times

Question 22

earnings per share?

Answer 22

attributable earnings/ average number of ordinary shares issued = …c per share

Question 23

earning yield?

Answer 23

earnings per share/ market price per share x 100 = %

Question 24

dividend per share?

Answer 24

ordinary dividend declared/ average number of ordinary shares issued = …c per share

Question 25

dividend yield?

Answer 25

dividend per share/ market price per share x 100 = %

Question 26

price-earnings ratio

Answer 26

market price per share/ earnings per share = …

Question 27

book value per share?

Answer 27

(shareholder’s equity - preference shares - intangible assets)/ number of ordinary shares issued = R… per share