financial ratios

Question 1

gross profit margin

Answer 1

gross profit / revenue

Question 2

net profit margin (and operating)

Answer 2

profit before interest and tax / revenue
or
(revenue-costs) / revenue

Question 3

post tax profit (and net)

Answer 3

net profit / revenue

Question 4

operating return on assets

Answer 4

operating profit / total assets

Question 5

ROCE

Answer 5

Operating profit/ capital employed
or
EBITDA / capital employed

Question 6

ROA (return on assets)

Answer 6

post tax (net) profit / total assets

Question 7

ROE (return on equity)

Answer 7

post tax (net) profit / total equity

Question 8

RE / TA

Answer 8

retained earnings / total assets

Question 9

assets turnover

Answer 9

revenue / total assets

Question 10

non-current assets turnover

Answer 10

revenue / non-current assets

Question 11

net working capital turnover

Answer 11

revenue / net working capital
or
revenue / (inventory + receivable - payables)

Question 12

current ratio

Answer 12

current assets - current liabilities

Question 13

WC / TA

Answer 13

working capital / total assets

Question 14

quick ratio

Answer 14

(current assets - inventory) / current liabilities

Question 15

cash ratio

Answer 15

cash and other equivalent / current liabilities

Question 16

inventory turnover period

Answer 16

(inventory / cost of sales) x 365 days

Question 17

receivable collection period

Answer 17

(trade receivables / credit sales) x 365 days

Question 18

payables payment period

Answer 18

(trade payables / credit purchases (COS)) x 365 days

Question 19

cash cycle

Answer 19

inventory turnover period + receivables collection period - payables payment period

Question 20

operating cycle

Answer 20

inventory turnover period + receivables collection period

Question 21

debt ratio

Answer 21

total debts / total assets

Question 22

debt to equity ratio (book value)

Answer 22

total debts / total equity

Question 23

debt to equity ratio (market value)

Answer 23

total debts / market capitalisation

Question 24

gearing (book value)

Answer 24

long term debt / capital employed (total assets - current liabilities)

Question 25

gearing (market value)

Answer 25

long term debt / (long term debt + market capitalisation)

Question 26

MC / TL

Answer 26

market capitalisation / total liabilities

Question 27

financial leverage

Answer 27

total assets / total equity

Question 28

interest cover

Answer 28

PBIT (profit before interest and tax) / interest

Question 29

EPS (earnings per share)

Answer 29

(net profit after tax - preferred dividends) / number of ordinary shares

Question 30

P/E ratio (price to earnings)

Answer 30

price per share / EPS (earnings per share)

Question 31

dividend payout ratio

Answer 31

DPS (dividends per share) / EPS (earnings per share)
or
dividends / net income

Question 32

plowback ratio

Answer 32

retained earnings / net income
or
1 - dividend payout ratio

Question 33

dividend yield (net)

Answer 33

DPS (dividend per share) / price per share

Question 34

dividend yield (gross)

Answer 34

net dividend yield / (1 - tax rate)

Question 35

dividend coverage

Answer 35

EPS (earnings per share) / DPS (dividend per share)

Question 36

earnings yield (net)

Answer 36

EPS (earnings per share) / price per share