Performance Indicators Flashcards
How do you calculate the Gross Profit Margin?
Gross Profit/Revenue X 100
How do you calculate the Operating Profit Margin?
Operating Profit/Revenue X 100
How do you calculate the Distribution Cost as a percentage of Revenue
Distribution Costs/Revenue X 100
How do you calculate the Administration Expenses as a percentage of Revenue?
Administration Expenses/Revenue X 100
How do you calculate Working Capital?
Current Assets - Current Liabilities
How do you calculate Capital Employed?
Non-Current Assets + Working Capital or Total Equity + Non Current Liabilities
How do you calculate Return on Capital Employed?
Operating Profit/Capital Employed X 100
What does Gearing show?
The Gearing equation shows how the business is structured - whether it is funded by secure capital or large loans. It shows how much of the business is funded by loans. Ideally the lower the better.
How do you calculate Gearing?
Non-Current Liabilities/(Total Equity + Non-Current Liabilities) X 100
What does Return on Shareholders’ Funds show?
It shows how their investment is performing in terms of profitability
How do you calculate Return on Shareholders Funds
Profit After Tax/Total Equity X 100
How do you calculate the Current Ratio?
Current Assets/Current Liabilities
What does the Current Ratio show?
It compares the current liabilities to current assets.
How do you calculate Inventory Holding Period (Days)?
Inventories/Cost of Sales X 365
What does the Inventory Holding Period (Days) show?
This tells us how often inventory is expected to turnover.
