Module 9 - Equations - Ratio Analysis Flashcards
Gross margin (%)
Gross profit / turnover
Mark-up (%)
Gross profit / cost of sales
Net profit margin
(Profit before interest and tax (PBIT) / turnover)
Return on Capital Employed (ROCE)
PBIT / Capital Employed
OR
(PBIT / Capital Employed) = (PBIT / turnover) x (Turnover / Capital Employed)
OR
Net Profit Margin x Asset Turnover
Asset turnover
Turnover / Capital Employed
What is EPS?
Earnings per share
Given in pence
EPS equation
Profit or loss attributable to ordinary shareholders / weighted average number of ordinary shares outstanding during the period
(P/L attributable to ordinary shareholders / no. of shares)
Current ratio
(Current assets / current liabilities)
Quick ratio
(Current assets - stock / current liabilities)
It more means don’t include stock not take it away
Debtor days (sometimes referred to as ‘days receivables’)
(Trade debtors / credit sales) x 365
Creditor days
(Trade creditors / credit purchases) x 365
Purchases
Cost of sales - opening stock + closing stock
Stock turnover
Cost of sales / stock
Stock days
(Stock / cost of sales) x 365
Working capital cycle
Debtor days + stock days - creditor days