Formulas

Question 1

What is the formula for current ratio? (Liquidity)

Answer 1

Current assets/current liabilities

Question 2

What is the formula for the acid test ratio(liquidity)

Answer 2

Current assets-stock/current liabilities

Question 3

What is the formula for gross profit margin(profitability)

Answer 3

Gross profit/sales revenue x 100

Question 4

What is the formula for net profit margin?(profitability)

Answer 4

Net profit/sales revenue x 100

Question 5

What is the formula for Return on Capital employed(profitability)

Answer 5

Operating profit/ total equity x non-current liabilities

Question 6

What is the formula for return on equity?(profitability)

Answer 6

Operating profit/total equity x 100

Question 7

What is the formula for Gearing?

Answer 7

Non-current liabilities/total equity + non-current liabilities

Question 8

What is the formula for interest cover?(gearing)

Answer 8

Operating profit/interest payable

Question 9

What is the formula for receivable days(financial efficiency)

Answer 9

Trade receivables(debtors)/sales revenue x 365

Question 10

What is the formula for payable days(financial efficiency)

Answer 10

Trade payables(creditors)/cost of sales x 365

Question 11

What is the formula for assets turnover?(financial efficiency)

Answer 11

Sales revenue/net assets(assets-liabilities)

Question 12

What is the formula for stock turnover(financial efficiency)

Answer 12

Cost of sales/average cost

Question 13

What is the formula for dividend per share(shareholder)

Answer 13

Total number of dividends paid/number of shares in issue

Question 14

What is the formula for dividend yield(shareholder)

Answer 14

Dividend per share/share price

Question 15

Formula for stock turnover

Answer 15

Cost of sales/inventories(stock)

Question 16

Formula for stock turnover period

Answer 16

Inventories x 365/cost of sales