Ratios Flashcards
1
Q
How to calculate net profit margin
A
Net profit
Sales X100
2
Q
What does return on capital employed show
A
Shows how Kuching profit company makes fir every £1.00 invested
Higher figure us better
3
Q
How to calculate return on capital employed
A
Operating profit
Capital employed. X100
4
Q
What does liquidity mean
A
Ability to pay off their debts
5
Q
What is the acid test ratio
A
Current liabilities. X100
Should be between 0.8 and 1.0
6
Q
What is the current ratio
A
Current liabilities. X100
Should be between 1.5 and 2
7
Q
How to calculate gross profit margin
A
Gross profit divide sales x100
