Formulae

Question 1

Return on capital employed (ROCE)

Answer 1

Profit before interest and tax
——————————— x 100
Equity + long term loans

Question 2

Operating profit margin

Answer 2

Profit before interest and tax
——————————- X100
Sales revenue

Question 3

Gross profit margin

Answer 3

Gross profit
————– x100
Sales revenue

Question 4

Income statement

Answer 4

SR
- COS 
=GP
- OE
=OP
- FE
= PBT
- T 
= PFY

Question 5

Current ratio

Answer 5

Current liabilities

Question 6

Acid/quick ratio

Answer 6

Current liabilities

Question 7

Inventory turnover period

Answer 7

Inventory held
—————– x 365
Cost of sales

Question 8

Collection period for receivables

Answer 8

Trade receivables
——————– x 365
Credit sales

Question 9

Settlement period for payables

Answer 9

Trade payables
——————x 365
Credit purchases

Question 10

Sales revenue to capital employed

Answer 10

Equity + non current liabilities

Question 11

Sales revenue per employee

Answer 11

Number of employees

Question 12

Gearing ratio

Answer 12

Equity + non current liabilities

Question 13

Return on ordinary shareholder’s funds (ROSF)

Answer 13

Net profit if any
—————————— X 100
Equity - pref share capital

Question 14

IRR

Answer 14

(b-a) na
a+ ———-
na-nb

Question 15

a
na
b
nb

Answer 15

Discount factor of a
NPV of a
Discount factor of b
NPV of b