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BPP FIN > Module 8 > Flashcards

Module 8 Flashcards

1
Q

How to calculate gross margin?

A

Gross profit/turnover x 100

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2
Q

How to calculate mark up?

A

Gross profit/cost of sales x 100

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3
Q

How to calculate net profit margin?

A

Profit before interest and tax PBIT/ turnover x 100

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4
Q

How to calculate return on capital employed?

Primary ratio

A

Profit before interest and tax PBIT/ capital employed x 100

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5
Q

How to calculate capital employed?

A

Total assets - current liabilities

OR

shareholders funds+ long term creditors

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6
Q

How to calculate asset turnover?

A

Turnover / capital employed

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7
Q

How to calculate earnings per share?

A

Profit or loss attributable to ordinary shares/ weighted average no. Ordinary shares

After tax and after preference dividends

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8
Q

How to calculate current ratio?

A

Current assets/current liabilities

Look to be greater than 1

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9
Q

What are the four types of radios?

A

Profitability
Liquidity
Management/Activity
Risk

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10
Q

How to calculate debtor days?

A

Trade debtors/credit sales x 365

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11
Q

How to calculate creditor days?

A

Trade creditors/credit purchases x 364

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12
Q

How to calculate stock turnover?

A

Costs of sales /stock

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13
Q

How to calculate stock days?

A

Stock / cost of sales x 365

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14
Q

How to calculate gearing ratio?

A

Debt capital / shareholders funds x 100

OR

debt capital / capital employed x 100

Debt/equity OR
Debt/(debt + equity)

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15
Q

How to calculate interest cover?

A

PBIT/ interest charges

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16
Q

How to find out purchases?

A

Cost of sales - opening stock + closing stock

17
Q

How to calculate working capital cycle?

A

Debtor days + stock days - creditor days

18
Q

What are the limitations of ratio analysis?

A

Historic information used - inflation effects? Inaccurate what’s happening

Year end figure manipulation to look better

Lack of information

Dangers of inter firm comparisons

  • accounting policies
  • different industries

BPP FIN (14 decks)

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