Key terms Flashcards
Turnover
The total revenue generated by a business in a set amount of time.
Cost of Sales
Total direct costs in making a product ready for sale.
Gross Profit
The profit a company makes after deducting the costs associated with producing and selling its products.
Operating Expenses
An expense a business incurs through operating. E.g. rent, bills.
Current Ratio
Current assets/current liabilities
Debt Collection Period
Accounts Receivable/Net Sales x365
Creditor Payment Period
How long it takes a creditor to pay the company.
(Trade Payables x 365)/ Annual purchases on credit
Gearing Ratio
Total Equity/Total Debt
Capital Gearing %
Debt/Assets x 100
Interest Cover
The amount of times that operating profit covers interest.
Acid Test Ratio
Quick Assets/Quick Liabilities
