Ratios Flashcards
4 measures of financial performance
Return on capital employed
Gross profit margin
Net profit margin
Asset turnover ratio
Return on capital employed
ROCE
Profit before interest and tax
———————————. X100
Net capital employed
Where netcapital employed =
Equity + non current liabilities =
Total asssets - currrent liabilities
Gross profit margin
Gross profit
—————————- X100
Turnover or revenue
Gross profit mark up
Profit as % of cost
Gross profit
—————- x100
Cost of sale
Operating profit margin
Operating profit
———————- X100
Turnover/revenue
Net profit margin
Net profit
———————- ——x100
Turnover/ revenue
Asset turnover ratio
Turnover
——————————————- x100
Net Capital Employed
Current ratio
Current assets
———————-
Current liabilities
Acid test ratio
Current assets - inventories
—————————————
Current liabilities
Receivable days
How long it takes to receive payment from credit customers
Payable days
How long it takes to pay credit suppliers
Inventory days
How long the stock is held
Trade receivable days
formula.
Trade receivables
————————— x 365
Turnover
Trade payable days
Trade payables
————————— X 365
Purchases
Inventory days ( days )
Inventory
————————— x 365
Cost of sales
Gearing or leverage
Amount of fixed interest / debt capital relative to the amount of equity share capital.
Leverage or debt / equity ratio
Debt
——— x100
Equity
Gearing
Debt
——————— x100
Debt + equity
Interest cover
Profit before interest and tax
————————— ————
Interest expenses
Measures of return on investment
Important to shareholders
Name 3
Earnings per share
Price earning
Market to book
Earning per share ratio
Profit after tax and prefeenxe dividens
————————— ——x100
Number of equity shares
Price earning ratio
Market price per share
————————— x 100
Earrings per share
Market to book ratio
Market price of equity
————————— — x100
Book value of equity
