Equations Flashcards
Proprietors interest =
Capital + Profit - Drawings
Equity =
Share Capital + Retained Profit + Other Reserves
Equity
Equity = net assets = share capital + Reserves
Cost of sales
Opening inventory + purchase - closing inventory
Retained earnings
Retained earnings b/f + Profit - dividends
Rate of depreciation if rate of depreciation or useful life has changed.
(Carrying amount - residual value) / remaining useful life
Subsequent measure of a lease
Cost - depreciation- impairments
Gross profit margin
(Gross profit/revenue) X 100
Operating profit margin
(Operating profit/revenue) X 100
Expenses ratio
(Operating expenses/revenue) X 100
Asset turnover
Revenue/capital employed
Capital employed
Total equity- current liabilities OR
Total assets - current liabilities
Return on capital employed
(Profit from operations/capital employed) X 100
Return on total assets
(Profit from operations/total assets) X 100
Return on equity
(Profit after tax/total equity) X 100
Earnings per share
Profit after tax/number of issued ordinary shares
Current ratio
Current assets/current liabilities
Quick ratio
(Current assets - inventory)/current liabilities
Inventory holding period
(Inventories/COS) X 365
Average inventory
(Opening inventory + closing inventory)/2
Number of times inventory is turned over per annum
COS/Average inventory
Receivables collection period
(Trade receivables/revenue) X 365
Payable payment period
(Trade payables/COS) X 365
Working capital cycle
Inventory days + receivable days - payable days
