Finanacial statement analysis

Question 1

Gross profit margin (%)

Answer 1

Gross profit margin = (Gross profit / Net sales revenue) x 100

Question 2

Mark up on cost (%)

Answer 2

Mark up on cost = (Gross profit / cost of sales) x 100

Question 3

Profit margin (%)

Answer 3

Profit margin = (Profit for the period / Net sales revenue) x 100

Question 4

Return on equity (%)

Answer 4

Return on equity = (Profit for the period / average equity) x 100

Question 5

Current ratio

Answer 5

Current ratio = Total current assets / Total current liabilities

Question 6

Quick ratio

Answer 6

Quick ratio = (Total current assets - inventory - prepayments) / Total current liabilities

Question 7

Rate of inventory turnover

Answer 7

Cost of sale / Average inventory

Question 8

Days sales in inventory

Answer 8

(Average inventory / cost of sale) x 365

Question 9

Rate of trade receivables turnover

Answer 9

Net credit sales revenue / Average net trade receivables

Question 10

Trade receivables collection period

Answer 10

(Average net trade receivables / Net credit sales revenue) x 365