Finance ratios Flashcards
Return on capital employed
Operating profit
/
Equity + non-current liabilities [debt]
x100
Return on total assets
Operating profit
/
Total assets
x100
Return on shareholders’ equity
Net profit (profit for the period)
/
Equity
× 100
Operating profit margin
Operating profit
/
Revenue
× 100
Gross profit margin
Gross profit
/
Revenue
x 100
Net profit margin
Net profit (profit for the period)
/
Revenue
x 100
Asset turnover
Revenue
/
total assets
Total asset turnover
Revenue
/
Total assets
Non-current asset turnover
Revenue
/
Non-current assets
Inventories turnover
Cost of goods sold
/
Inventory
Inventories holding period
Inventory
/
Cost of goods sold
× 365
Rate of collection of trade receivables
Trade receivables
/
Revenue (credit sales)
× 365
Rate of payment of trade payables
Trade payables
/
Cost of goods sold (credit purchases)
x 365
Working capital cycle
Inventory holding period
+
receivables collection period
-
payables payment period
Current ratio
Current assets
/
Current liabilities
Quick ratio
Current assets - inventories
/
Current liabilities
Equity gearing
Borrowings (debt) + preference share capital
/
Equity
× 100
Total or capital gearing
Borrowings (debt) + preference share capital
/
Capital employed (equity + debt + preference share capital)
× 100
Interest cover
Operating profit
/
Debt interest + preference share dividends
Dividend pay-out ratio
Equity share dividend(s) paid in the year
/
Net profit for the year
× 100
Dividend cover
Profit for the year
/
Equity share dividend(s) paid in the year
Dividend yield
Equity share dividend(s) per share
/
Market price of an equity share
× 100
Earnings per share
Profit attributable to equity shareholders for the year
/
Weighted average number of outstanding equity shares during the year
Diluted EPS
Adjusted profit attributable to equity shareholders for the year
/
Weighted average number of outstanding equity shares during the year + diluted equity shares
