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Business Accounting And Finance > Ratios > Flashcards

Ratios Flashcards

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1
Q

What are the 4 profitability ratios?

A

Gross profit margin
Net profit margin
Return on captain employed
Return on equity

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2
Q

Gross profit margin calculation ?

A

Gross profit/revenue x100

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3
Q

What does the GPM show?

A

How much of every pound turnt over is gross profit

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4
Q

NPM calculation?

A

Net profit/revenue x100

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5
Q

NPM what is it?

A

For every pound of turnover what % is net profit

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6
Q

ROCE calculation?

A

Operating profit/long term capital employed x100

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7
Q

ROCE meaning?

A

% of money made from the money put into the business.

How good a business is at generating profits from capital

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8
Q

ROE calculation?

A

Net profit/equity x100

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9
Q

What does roe show?

A

the measure of a company’s net income divided by its shareholders’ equity

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10
Q

What are the 4 liquidity ratios?

A

Current
Acid test
Gearing
Debt equity

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11
Q

Current ratio calculation?

A

Current assets/current liabilities

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12
Q

What do the liquidity ratios show?

A

How easily a business can get cash/turn assets to cash

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13
Q

AT ratio calculation ?

A

Current assets- stock=current liabilities

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14
Q

Gearing ratio calculation?

A

Debt/equity+debt

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15
Q

What does it mean if a business is highly geared ?

A

They have a lot of loans

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16
Q

Debt equity calculation?

A

Debt/equity x100

17
Q

What are the 5 efficiency ratios

A

Non current asset turnover
Stock turnover
Debtor days/collection period
Creditor days/payment
Interest cover

18
Q

What do the activity/efficiency ratios show?

A

Measures a companies short term/current performance

19
Q

Non current asset turnover?

A

Turnover/fixed assets

20
Q

Stock turnover?

A

Cost of sales/stock

21
Q

Debtor days?

A

Debtors/turnoverx365

22
Q

Creditor days?

A

Creditors/cost of sales x365

23
Q

Interest cover ?

A

Operating profit/interest

24
Q

What is operating profit ?

A

Profit before tax interest and depreciation

25
Q

What are the 5 shareholder ratios?

A

Earnings per share
Price earnings ratio
Dividend per share
Dividend yield
Dividend cover

26
Q

EPS ratio?

A

Net profit/number of ordinary shares

27
Q

Price earnings ratio?

A

Share price/ EPS

28
Q

Dividend per share?

A

Dividend/number of shares

29
Q

Dividend yield?

A

Dividend per share/share price

30
Q

Dividend cover ?

A

Net profit/dividends

Business Accounting And Finance (2 decks)

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