Ratio Analysis

Question 1

What is the formula for ROCE?

Answer 1

Profit before interest and tax / capital employed

Question 2

What is the formula for ROE?

Answer 2

Profit for shareholders / Equity

Question 3

What is the formula for gross profit margin?

Answer 3

Gross profit / sales

Question 4

What is the formula for net profit sales?

Answer 4

Profit / sales

Question 5

What is the formula for current ratio?

Answer 5

Current assets / current liabilities

Question 6

What is the formula for quick ratio?

Answer 6

Current assets - inventories / current liabilities

Question 7

What is the formula for asset turnover?

Answer 7

Sales / net assets

Question 8

What is the formula for inventory holding period?

Answer 8

(Average inventory / cost of sales ) x 365

Question 9

What is the formula for receivables collection period?

Answer 9

(Receivables / credit sales) x 365

Question 10

What is the formula for payables payment period?

Answer 10

(Payables / credit purchases) x 365

Question 11

What is the formula for earnings per share?

Answer 11

(Profit after tax - preference dividends / number of ordinary shares in issue) x 100

Question 12

What is the formula for price earnings ratio?

Answer 12

Market price per ordinary share / earning per share

Question 13

What is the formula for dividend cover?

Answer 13

Profit after tax - preference dividends / ordinary shares

Question 14

What is the formula for dividend yield?

Answer 14

(Dividend per ordinary share / market price per ordinary share) x 100%

Question 15

What is the formula for interest cover?

Answer 15

Profit before interest and tax / interest payable