Exam Flashcards
What is Return on Capital Employed (ROCE)?
Operating Profit ÷ (Equity + Non-Current Liabilities)
Measures how effectively the company generates profit from its long-term capital.
What is Return on Shareholders’ Funds (ROSF)?
Net Profit after Tax ÷ Equity
Indicates return earned by shareholders on their investment.
What is Operating Profit Margin?
Operating Profit ÷ Revenue × 100
Measures efficiency of operations before interest and tax.
What is Asset Turnover?
Revenue ÷ Non-Current Assets (or Capital Employed)
Indicates how well assets are used to generate revenue.
What is Current Ratio?
Current Assets ÷ Current Liabilities
Tests ability to cover short-term obligations.
What is Acid Test Ratio (Quick Ratio)?
(Current Assets − Inventory) ÷ Current Liabilities
Stricter liquidity test; excludes inventory.
What is Gearing Ratio?
Non-Current Liabilities ÷ (Equity + Non-Current Liabilities) × 100
Measures financial risk from reliance on debt.
What is Interest Cover?
Operating Profit ÷ Finance Costs
Tests ability to pay interest on borrowings.
What is Earnings Per Share (EPS)?
Net Profit after Tax ÷ Number of Ordinary Shares
Shows profit per share owned.
What is Dividend Per Share (DPS)?
Total Dividends ÷ Number of Ordinary Shares
Amount of dividend received per share.
What is Price-Earnings Ratio (P/E Ratio)?
Market Share Price ÷ Earnings Per Share
Reflects investor sentiment and valuation.
What is Dividend Yield?
Dividend Per Share ÷ Market Share Price × 100
Percentage return from dividends based on share price.
