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Finance > Revision > Flashcards

Revision Flashcards

1
Q

How to find gross profit

A

Revenue - costs of sale

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2
Q

How to find operating profit

A

Gross profit - finance costs

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3
Q

What is high gearing

A

High debt / low equity

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4
Q

An example of an internal financial variable

A

Financing agreements

Dividend policies

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5
Q

Return on capital employed

A

Operating profit / Share capital + reserves + non current liabilities x 100

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6
Q

Operating profit margin

A

Operating profit / sales revenue x 100

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7
Q

Gross profit margin

A

Gross profit / sales revenue x 100

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8
Q

Current ratio

A

Current assets / Current liabilities

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9
Q

Acid test ratio

A

Current assets (excluding inventories) / current liabilities

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10
Q

Payable days

A

Trade payables / cost of sales x 365

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11
Q

Receivable days

A

Trade receivables / cost of sales x 365

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12
Q

Inventory turnover

A

Average inventories held / cost of sales x 365

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13
Q

Gearing ratio

A

Non-current liabilities / share capital + reserves + non-current liabilities x 100

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14
Q

Accounting rate of return (ARR) formula

A

Average annual operating profit / average investment x 100

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15
Q

How to find average investment

A

(Cost of investment + disposable value) / 2

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16
Q

How to find PP

A

-cumulative cash flow / next years net cash flow

17
Q

How to find the PV

A

Cash flow x discount factor

18
Q

How to find NPV

A

Add together all the PVs

And subtract the initial cash

19
Q

How to calculate PV without the exact discount factor

A

Cash flow / (1.(discount rate) to the power of however many years

20
Q

Higher NPV =

A

Better

21
Q

What is IRR

A

The discount rate, which, when applied to the future cash flows of a project, will produce an NPV of precisely 0

22
Q

How to find profitability index

A

(NPV + initial investment) / Initial investment

Finance (9 decks)

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