NFP Ratio Analysis Flashcards
What is the definition for “Net Margin Benchmark” + what does it mean for the business?
The Net Margin Benchmark measures the percentage of sales dollars left after all expenses (including stock) halls been paid.
It provides a good opportunity to compare NFPO’s “return on income” with the performance of other NFPO’s.
How is the calculation of the “Net Margin Benchmark” found?
Net Profit / Net income
What is the definition for “Current Ratio”?
The current ratio enables the organisation to see if it has current assists sufficient to meet its debts with the margin of safety.
How is the Current Ratio calculated?
Total current assets/ Total current liabilities
Define “Leverage Ratio”?
The Leverage Ratio indicates the extent to which the organisation is reliant on Debt Financing VS Equity. Generally the higher the ratio, the more difficult it will be to borrow more money.
What is the calculation of Leverage Ratio?
Total Liabilities/ Total Accumulate Funds
Definition of Day’s Debtors?
The Days Debtors ratio indicates the number of days in the period for Debtors/ or Accounts Receivables to pay their debts.
Calculate Day’s Debtors?
Debtors x 365 / Net income
