Formulas - Ratios Flashcards
Gross profit margin
Gross profit
—————— x100
Sales
Net profit margin
Net profit
—————— x100
Sales
Operating profit margin
Operating profit
————— x100
Sales
Selling expenses as a percentage of sales
Selling expenses
————- x100
Sales
Expense as a percentage of sales
Expense
————x100
Sales
Cost as a percentage of sales
Cost
——-x100
Sales
Return on capital employed (ROCE)
Operating profit
——————x 100
Non current assets+ net current assets
Return on capital employed (ROCE)
Operating profit
—————- x100
Capital + long term liabilities
Return on net assets
Operating profit
—————- x100
Net assets
Value added
Sales -( cost of materials used and bought in services)
Can be divided by number of employees
Assets turnover
Turnover (sales revenue)
—————————-
Non cure assets +net current assets
ROCE
Operating profit margin x asset turnover
The current ratio
Current assets
———————
Current liabilities
Written as x:1
Where x is answer
Quick ratio or acid test ratio
Current assets- inventory
———————
Current liabilities
Written as x:1
Receivables collection period
Trade receivables
—————- x365
Credit sales
Payables payment period
Trade payables
——————x365
Credit purchases
Average inventory
0.5 x ( opening inventory + closing inventory)
Average age of inventory
Average inventory
——————- x365
Cost of sales
Average age of inventory
Closing inventory
—————x365
Cost of sales
Inventory turnover
Times per year
Cost of sales
——————
Average inventory
Inventory turnover
Times per year
Cost of sales
—————-
Closing inventory
Working capital cycle
Inventory days+ receivable days - payables days
Gearing ratio
Debt
————- x100
(Debt +equity)
Debt to equity ratio
Debt
————— x100
(Ordinary share capital +reserves)
Activity ratio ( production volume)
Standard hours for actual output
———————- x1000
Budgeted hours
Capacity ratio
Actual hours worked
————————x100
Budget hours
