[finance] ratios!!!

Question 1

what are the profitability ratios?

Answer 1

• Gross profit ratio
• Net Profit Ratio
• Return on Equity Ratio

Question 2

What is the Gross Profit Ratio?

Answer 2

Gross Profit/sales X’ 100/1… expressed as a %

Question 3

What is a Net Profit Ratio?

Answer 3

Net Profit/sales X’ 100/1.. expressed as a %

Question 4

Return on Equity Ratio

Answer 4

Net Profit/Owners equity X’ 100/1….expressed as a %

Question 5

what are the efficiency ratios?

Answer 5

• Expense Ratio

- Accounts Turnover Receivable ratio

Question 6

What is the Expense Ratio?

Answer 6

expenses/sales X’ 100 expresses as a %.. lower the better.

Question 7

What is the Accounts Receivable ratio?

Answer 7

2 steps:
sales/accounts recievables
…
365 divide by answer…… ideally 30 days… how long it takes the business to collect money owing to it by debtors.

Question 8

What are the Liquidity Ratios?

Answer 8

• Current Ratio
• Quick Ratio
• Working Capital Ratio

Question 9

What is the Current Ratio?

Answer 9

Current Assets/Current Liabilities..becomes a ratio..

Question 10

What is the Quick Ratio?

Answer 10

Current Assets - Inventory / Current Liabilities - bank overdraft

Question 11

What is the Working Capital Ratio?

Answer 11

current assets / current liabilities

Question 12

What are the Solvency ratios?

Answer 12

-Debt to Equity (Gearing) Ratio..

Question 13

What is debt to equity (also known as gearing) ratio?

Answer 13

total debt/owners equity X’ 100/1