Formula Ratio's

Question 1

Acid Test

Answer 1

Current Assets - Stock/Inventory / Current Liabilities

Question 2

Asset Turnover

Answer 2

Revenue / Net Assets

Question 3

Average Rate of Return

Answer 3

1. Net cash flow / N.O years = Average Annual Profit

2. (Annual profit / initial investment) x 100

Question 4

Current Ratio

Answer 4

Current Assets / Current Liabilities, expressed as x:1

Question 5

Dividend per Share

Answer 5

Total Dividends / Number issued, expressed in pence per share

Question 6

Dividend Yield

Answer 6

(Ordinary Share Dividend (in pence) / Current Market Price) x 100

Question 7

Gearing

Answer 7

(Non Current Liabilities / (Total equity + non current liabilities)) x 100

Question 8

Gross Profit

Answer 8

Sales Revenue - Cost of sales

Question 9

Inventory Turnover

Answer 9

Cost of Sales / Average inventory held

Question 10

Market Share

Answer 10

(Sales of a Firm / Total Market Sales) x 100

Question 11

Moving Averages (3 point moving average)

Answer 11

Add 1,2,3 divide by 3
Add 2,3,4 divide by 3
Add 3,4,5 deivide by 3
Continue until the last number is included in a set of 3

Question 12

Net Assets

Answer 12

Non-Current Assets + Current Assets - Current Liabilities - Non current Liabilities

Question 13

Net Current Assets/Liabilities

Answer 13

Current Assets - Current Liabilities.

Question 14

Net Present Value

Answer 14

• Net Cash flow Table
• Multiply each years net cash flow by the discount factor year 0 is multiplies by 1
• Add all the net values including the negative for year 0

Question 15

Net Profit Margin

Answer 15

(Operating profit (net profit) / Sales Revenue) x 100

Question 16

Payable Day’s

Answer 16

Payable x 365 / Cost of Goods Sold

Question 17

Payback

Answer 17

1. Net cash flow Table
2. Cumulative to identify when investment is covered
3. ÷ amount paid in last year by net cash flow same year
4. Times figure in step 3 by 12 to get monthly.

Question 18

Receivables

Answer 18

Receivables x 365 / Revenue (in days)

Question 19

ROCE

Answer 19

Operating Profit / Total equity + Non Current Liabilities.

Question 20

Working Capital

Answer 20

Current Assets - Current Liabilities

Question 21

Equity

Answer 21

TOTAL assets - TOTAL liabilities