Ratios Flashcards
Formulas
Return on capital employed
(R.O.C.E)
operating profit
_________________ x 100 = %
Capital employed
Return on equity funds (R.O.E.F)
earnings
___________________ x100 =%
Shareholders funds
Dividend per share (d.p.s)
O.S.D
_________________________ x100 = cent
Number of ordinary shares
(cent)
Dividend yield
D.P.S
________________ x100= %
Market Price
dividend cover
Earnings
____________ =times
O.S.D
Real Return
(dividend cover)(dividend yield)
Earnings per share (E.P.S)
Earnings
____________________________ x100=%
Number of ordinary shares
price earnings ratio (P.E.R)
market price of share
_________________________ = years
E.P.S
Period to recoup share price based on present dividend payout rate
Market price
_______________ = Years
D.P.S
period to recoup share price based on current performance
market price of share
_________________________ = years
E.P.S
(same as P.E.R)
projected market value share
(price earnings ratio)(E.P.S)
Quick Ratio / acid test ratio
Liquid assets : current liabilities
Norm = 1:1
Liquid assets= current assets- closing stock
working capital ratio /current ratio
current assets/ current liabilities
Norm 2:1
gearing
fixed interest capital
_______________________ x100=%
Total capital
Fixed interest capital= loans, debentures, preference shares
> 50% high geared, <50% low geared
interest cover
operating profit
____________________ = times
interest charged for year
Stock turnover
cost of sales
_______________ = times
Average stock
used to get opening stock
debtors average period of credit
debtors
____________ x12/365 = months/days
Credit sales
used to get credit sales
creditors average period of credit
creditors
_____________ x12/365 = months/days
Credit purchases
used to get credit purchases
