Ratios Flashcards
What does operating profit show?
How efficiently a company generates profit from operations before interest and tax
What is the formula for operating profit margin?
(Operating profit/net sales) x 100
What is gross profit margin?
Percentage of revenue remaining after accounting for direct costs associated with production
what is the formula for gross profit margin?
(Gross profit/net sales) x 100
What is net profit margin?
Profitability of a company after accounting for all expenses, inc tax
What is the equation for net profit margin?
(Net profit/net sales) x 100
What is asset turnover?
The efficiency to which a company utilized its assets to generate sales
What is return on capital employed (ROCE)?
return a company generates from its capital employed, inc both equity and long term debt
What is current ratio?
short term liquidity and ability to cover current liabilities with current assets
What is receivables collection period?
he average number of days it takes for a company to collect payment from its customers after making a sale
What is stock turnover period?
how quickly a company sells its inventory and replaces it with new stock
What is gearing ratio?
the proportion of a company’s capital employed that is financed by debt.
What is gearing ratio to capital employed?
compares the total debt plus overdraft to the total capital employed
What is the formula for asset turnover?
Net Sales / Average Total Assets
What is the formula for ROCE?
(Operating Profit / Capital Employed) * 100
