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M2 Financial Management > Financial Statement Analysis > Flashcards

Financial Statement Analysis Flashcards

1
Q

How do you calculate return ordinary shareholders funds (ROSF)

A

Profit for the year less any preference dividend
—————————————————— X 100
Ordinary share capital + reserves

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2
Q

How do you calculate return on capital employed (ROCE)

A

Operating profit
———————————————————– x 100
Share capital + reserves + non-current liabilities

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3
Q

How do you calculate operating profit margin?

A

Operating profit divided by sales revenue times 100

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4
Q

How do you calculate gross profit margin?

A

Gross profit divided by sales revenue times 100

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5
Q

How do you calculate average inventories turnover period?

A

Average inventories held divided by cost of sales times 365

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6
Q

How do you calculate average settlement period for trade receivables?

A

Average trade receivables divided by credit sales revenue times 365

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7
Q

How do you calculate average settlement period for trade payables?

A

Average trade payables divided by credit purchases times 365

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8
Q

Sales revenue to capital employed?

A

Sales revenue divided by share capital plus reserves plus non-current liabilities

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9
Q

Sales revenue per employee?

A

Sales revenue divided by number of employees

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10
Q

What are the four profitability ratios?

A

Return on ordinary shareholders funds
Return on capital employed
Operating profit margin
Gross profit margin

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11
Q

What are the five efficiency ratios?

A

Average inventory is turnover period
Average settlement period for trade receivables
Average settlement period for trade payables
Sales revenue to capital employed
Sales revenue per employee

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12
Q

What are the two main liquidity ratios?

A

Current ratio

Acid test ratio

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13
Q

Current ratio?

A

Current assets divided by current liabilities

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14
Q

Acid test ratio?

A

Current assets excluding inventory divided by current liabilities

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15
Q

What are the two financial gearing ratios?

A

Gearing ratio

Interest cover ratio

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16
Q

Interest cover ratio?

A

Operating profit divided by interest payable

17
Q

Gearing ratio?

A

Non-current liabilities divided by share capital reserves plus non-current liabilities times 100

18
Q

What are the four investment ratios?

A

Dividend payout ratio
Dividend yield ratio
Earnings per share
Price/earnings ratio

19
Q

What are the five categories of financial ratios?

A 
Profitability
investment
efficiency
liquidity
financial gearing

M2 Financial Management (1 decks)

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