Performance Measurement and Control

Question 1

What is the gross profit margin formula?

Answer 1

Gross profit/Turnover x 100%

Question 2

What is the operating profit margin formula?

Answer 2

Operating profit/Turnover x 100%

Question 3

What is the ROCE (return on capital employed) formula?

Answer 3

Operating profit/Capital employed x 100%

Question 4

What is the asset turnover formula?

Answer 4

Turnover/Capital employed

Question 5

What is the inventory holding period formula?

Answer 5

Inventory/Cost of sales x 365 days

Question 6

What is the receivables collection period formula?

Answer 6

Receivables/Credit sales x 365

Question 7

What is the payables payment period formula?

Answer 7

Payables/Credit purchases x 365

Question 8

What is the current ratio?

Answer 8

Current assets/Current liabilities

Question 9

What is the quick ratio (acid test) formula?

Answer 9

Current assets - Inventory/Current liabilities

Question 10

What is the gearing ratio?

Answer 10

Debt/Equity x 100%

Question 11

What is the interest cover formula?

Answer 11

Operating profit/Finance cost

Question 12

What are the 4 perspectives of the balanced scorecard?

Answer 12

Customer
Internal business process
Innovation and learning
Financial