Ratios Flashcards
Gross margin profit =
(Gross profit / Revenue) x 100 (Profitability)
Operating margin =
(Operating profit / Revenue) x 100 (Profitability)
Net margin =
(Net profit / Revenue) x 100 (Profitability)
Asset turnover =
Revenue / Capital employed (Profitability)
Capital employed =
Shareholders funds + long term debt (equity + borrowings) (Profitability)
Return on capital employed =
Profit from operations / Average total capital employed by shareholders and lenders (Profitability)
Current ratio =
Current assets / current liabilities (Liquidity)
Quick ratio =
(Current assets - Inventory) / Current liabilities (Liquidity)
Gearing ratio =
(Debt / Capital employed) x 100 OR (Debt/ Equity) x 100 (Capital Structure Ratios)
Interest cover =
Profit before interest / Interest payable (Capital Structure Ratios)
Sales (capital turnover) =
Sales revenue / Average total capital employed (Efficiency)
Inventory days =
(Inventory / Cost of sales) x 365 (Efficiency)
Receivables days =
(Trade receivables / Sales on credit) x 365 (Efficiency)
Payables days =
(Trade payables / Pruchases on credit) x 365 (Efficiency)
Working capital ratio =
Inventory days + receivables days - payables days
= Total working capital days (Efficiency)