Finance equations Flashcards
Liquidity: Current ratio equation
Current Assets / Current liabilities
Liquidity: Acid Test Ratio
(current assets - stock) / current Liabilites
Profitability: Gross Profit Margin
Gross Profit / Sales revenue X 100
Profitability: Net Profit Margin
Net Profit / Sales Revenue X 100
Profitability: ROCE (return on capital employed)
Operating profit / (total equity + non-current liabilities) X 100
Profitability: Return on equity
Operating Profit / total equity X 100
Gearing: Gearing
Non-Current Liabilities / (total equity + non-current liabilities)
Gearing: interest cover
Operating profit / interest payable
Financial Efficiency: Recivables (Debtor Days)
Trade Receivables (debtors) / sales revenue X 365
Financial efficiency: Payable (Creditor days)
Trade Payables (creditors) / cost of sales X 365
Financial Efficiency: Asset Turnover
Sales Revenue / Net assets (Assets - Liabilities)
Financial Efficiency: Stock Turnover
Cost of sales / stock
Shareholder: Dividend per share
Total dividends paid / Number of shares in issue
Shareholder: dividend Yield
Dividend per share / share price
Shareholder Ratios: Dividend cover
Profit after Tax / Dividends
Shareholder ratios: Earnings per Share (EPS)
Profit after Tax / Number of shares issued
Shareholder ratios: Price earnings Ratio
Share price / earnings per share
Revenue
selling price per unit x number of units sold
Variable costs
variable costs per unit x number of units sold
total costs
Fixed costs + Variable costs
Profit
Total revenue - Total costs
Market Growth %
change in size of market (specified time) / original size of the market
Added Value
Sales revenue - costs of brought in goods and services
Labour Productivity
output (specified time) / number of employees
Unit costs (average costs)
total costs / number of units of output
Gross profit
Revenue - cost of sales
Operating profit
gross profit - operating costs
Variance
Budgeted figure - actual figure
Contribution per unit
Selling price - Variable costs per unit
Total contribution
Contribution per unit X units sold
OR
total revenue - total variable costs
Break even output
Fixed costs / contribution per unit
Margin of safety
Actual level of output - Break even level of output
Labour turnover (%)
number of staff leaving / number of staff employed X 100
What is found on a income statement
Revenue cost of sales gross profit expenses operating profit depreciation profit before interest and tax finance costs Profit before tax Tax Profit for the year Dividends retained profit
What is found on statement of financial position
Non-current assets current assets total assets current liabilities non current liabilities capital & reserves attributable to equity holders total equity & liabilities
What is on a cash flow forecast
Sales revenue interest on bank balances Subsidies Loans Share capital invested
