Ratio Analysis Flashcards
1
Q
Profitability ratios -
A
measure the performance of the business and focus on profit, revenue and the amount invested in the business
2
Q
Liquidity ratios -
A
measure how easily a business can pay its short-term debts, such as wages or suppliers
3
Q
Gross Profit Margin =
A
(Gross Profit / Revenue)x100
4
Q
Operating profit margin =
A
(Operating profit / Revenue)x100
5
Q
Mark-up =
A
(Profit per item / Cost per item)x100
Profit made per item sold
6
Q
Current ratio =
A
Current assets / Current liabilities
7
Q
Acid test ratio =
A
(Current assets - Inventory)/Current Liabilities
8
Q
Return On Capital Employed (ROCE) =
A
(Operating profit/Capital employed)x100
