Ratio Formula Part A

Question 1

Interest Cover

Answer 1

Net profit before interest / interest

Question 2

Average period of credit given to debtors

Answer 2

Debtors x 12 /credit sales

Question 3

Average period of credit received from creditors

Answer 3

Creditors x 12 / credit purchases

Question 4

Gearing

Answer 4

Loans + debentures + pref shares /
Capital employed

Question 5

Dividend cover

Answer 5

Net after pref / ordinary dividend

Question 6

Dividend per share

Answer 6

Ordinary div x 100 / no.of ord. issued

Question 7

Dividend yield

Answer 7

Dps x 100 / market value

Question 8

Price earnings ratio

Answer 8

Market value/ eps.

Question 9

Earnings per share

Answer 9

Net after pref. x100 / no.of shares issued

Question 10

Return on capital employed

Answer 10

Net ( b4 interest ) x100 / cap.Employed

Question 11

Price dividend ratio
( period to recoup share price at present payout rate )

Answer 11

Market val / dps

Question 12

Operating profit

Answer 12

Gross profit - operating expenses

Question 13

Ordinary dividend

Answer 13

Div paid - pref div

Question 14

Dividend payout

Answer 14

Dps / Eps x 100

Question 15

Projected market value of ordinary share

Answer 15

Price earnings ratio x earnings per share

Question 16

Stock turnover

Answer 16

Cost of sales / average stock

Question 17

Average stock

Answer 17

Opening + closing stock / 2