Financial analysis

Question 1

Mark-up (%)

Answer 1

(Gross profit/Cost of goods sold)x100%

Question 2

Gross profit ratio (%)

Answer 2

(Gross profit/Net sales)x100%

Question 3

Net profit ratio (%)

Answer 3

(Net profit before tax/Net sales)x100%

Question 4

Return on capital employed (%)

Answer 4

[(Profit before tax+interest)/Average capital employed]x100%

Question 5

Current ratio (X:1)

Answer 5

(Current assets/Current liabilities):1

Question 6

Average trade receivables collection period (Days/weeks/months)

Answer 6

[(Opening-Closing TR)/Credit sales]x365

Question 7

Trade receivables turnover rate (Times)

Answer 7

Credit sales/[(Opening+Closing TR)/2]

Question 8

Average Trade Payable repayment period (Days/weeks/months)

Answer 8

[(Opening-Closing TP)/Credit Purchases]x365

Question 9

Trade Payables turnover rates (times)

Answer 9

Credit Purchases/(Opening-Closing TP)

Question 10

Inventory turnover period (Days/weeks/months)

Answer 10

[(Opening-Closing Inventory)/Cost of Goods Sold]x365

Question 11

Inventory turnover rates (times)

Answer 11

Cost of Goods Sold/[(Opening-Closing Inventory)]/2

Question 12

Gearing ratio (%)

Answer 12

[(Non-current liabilities+Preference share capital)/(Non-current liabilities+Shareholders’ fund)]x100%

Question 13

Total Assets Turnover (times)

Answer 13

Net Sales/Total Assets

Question 14

Earning per share (EPS) ($X)

Answer 14

(Net profit after tax-Preference share dividend)/Number of ordinary share issued

Question 15

Dividend Cover (times)

Answer 15

(Net profit after tax-Preference share dividend)/Ordinary dividend paid

Question 16

Price-earning ratio (times)

Answer 16

Market price per share/Earning per share

Question 17

Quick ratio (X:1)

Answer 17

(Current assets-Inventory)/Current liabilities:1