Ratio Meaning Flashcards
Asset Turnover
Measures how the assets of the business are being utilise to generate revenue.
Acid Test
A measure of a firm’s short term survival i.e its ability to meet short term debts and day to day expenses. How easy they can pay off short term debts with assets
Average Rate of Return
An investment appraisal technique that calculates average profit as a percentage of the total cost of the initial investment.
Current Ratio
A measure of a firm’s liquidity and short term survival i.e its ability to meet short term debts and day to day expenses
Dividend per Share
The return paid to the shareholders for each unit of their investment.
Dividend Yield
Measures the return on a shareholder’s investment as a percentage of the current market price.
Float Time
The amount of extra time available to complete a non critical activity without delaying the project.
Gearing
A measure of the proportion of a business’s capital that is funded through long term loans.
Gross Profit
Profit after cost of sales has been deducted and before expenses.
Inventory Turnover
Measures how efficiently a business replaces its stock in a year and hence whether stock is being used efficiently to generate sales.
Moving Averages
A method of market analysis which shows whether a trend is significant by smoothing out fluctuations.
Net Assets
The net worth of a business by the balancing of assets against liabilities.
Net Current Assets/Liabilities
The difference between Current Assets and Current Liabilities.
Net Present Value
An investment appraisal technique that calculates the total return on an investment taking into account the time value of money.
Net Profit Margin
A measure of Profitability that looks at operating profit as a percentage of sales revenue.
