ratios

Question 1

current ratio

Answer 1

current assets/current liabilities

Question 2

gross profit margin

Answer 2

gross profit/revenue x100

Question 3

expenses in relation to revenue

Answer 3

expenses/revenue x100

Question 4

return on capital employed

Answer 4

profit from operations/capital employed x100

Question 5

rate of inventory turnover (ROIT) (times)

Answer 5

cost of sales/average inventory

Question 6

average inventory

Answer 6

(opening + closing) / 2

Question 7

trade receivables (days)

Answer 7

trade receivables/credit sales x365

Question 8

dividend cover

Answer 8

profit AFTER interest and tax/ordinary share dividends paid

Question 9

interest cover

Answer 9

profit BEFORE interest and tax/interest payable

Question 10

price earnings

Answer 10

current market price(in pence)/earnings per shares(in pence)

Question 11

liquid capital ratio (acid test) (:1)

Answer 11

current assets - inventory/ current liabilities

Question 12

markup(%)

Answer 12

gross profit/cost of sales x100

Question 13

profit in relation to revenue (%)

Answer 13

profit for the year BEFORE TAX/revenue x100

Question 14

rate of inventory turnover (days)

Answer 14

average inventory/cost of sales x365

Question 15

trade payable days (days)

Answer 15

trade payables/credit purchases x365

Question 16

earnings per share

Answer 16

earnings in pence(i.e profit BEFORE tax in pence)/number of issued ordinary shares

Question 17

dividend yield

Answer 17

dividends per share/market price per share x100

Question 18

capital gearing

Answer 18

NCL/capital employed x100