Module 9 - Equations - Ratio Analysis Flashcards

1
Q

Gross margin (%)

A

Gross profit / turnover

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2
Q

Mark-up (%)

A

Gross profit / cost of sales

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3
Q

Net profit margin

A

(Profit before interest and tax (PBIT) / turnover)

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4
Q

Return on Capital Employed (ROCE)

A

PBIT / Capital Employed

OR

(PBIT / Capital Employed) = (PBIT / turnover) x (Turnover / Capital Employed)

OR

Net Profit Margin x Asset Turnover

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5
Q

Asset turnover

A

Turnover / Capital Employed

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6
Q

What is EPS?

A

Earnings per share

Given in pence

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7
Q

EPS equation

A

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)

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8
Q

Current ratio

A

(Current assets / current liabilities)

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9
Q

Quick ratio

A

(Current assets - stock / current liabilities)

It more means don’t include stock not take it away

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10
Q

Debtor days (sometimes referred to as ‘days receivables’)

A

(Trade debtors / credit sales) x 365

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11
Q

Creditor days

A

(Trade creditors / credit purchases) x 365

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12
Q

Purchases

A

Cost of sales - opening stock + closing stock

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13
Q

Stock turnover

A

Cost of sales / stock

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14
Q

Stock days

A

(Stock / cost of sales) x 365

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15
Q

Working capital cycle

A

Debtor days + stock days - creditor days

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16
Q

What is working capital cycle

A

The amount of time taken from cash leaving the business to pay for stock until a cash inflow is received when the goods are sold and paid for

17
Q

Gearing ratio

A

(Debt capital / shareholders funds)

OR

(Debt capital / capital employed)

18
Q

Interest cover

A

PBIT / interest charges

19
Q

Long term debt

A

Capital employed - shareholders funds

20
Q

Capital employed

A

Total assets - current liabilities