Unit 7 - Analysing the strategic position of the business Flashcards
Current assets
Current assets = inventories + receivables + cash and other cash equivalents
Working capital or Net current assets
Net current assets = current assets - current liabilities
Net assets
Net assets = (non current assets + working capital) - non current liabilities
Assets employed 1
Assets employed = net current assets + non current assets
Total equity
Total equity = share capital + reserves
Capital employed
Capital employed = total equity + non current liabilities
Assets employed 2
Assets employed = Capital employed
Gross profit
Gross profit = revenue - cost of sales
Operating profit
Operating profit = gross profit - expenses
Profit before tax
Profit before tax = Operating profit + finance income - finance costs
Profit for the year
Profit for the year = profit before tax - taxation
Earnings per share
Earnings per share = profit for the year / number of shares issued
Gross profit margin
Gross profit margin = (gross profit / sales revenue) x 100
Operating profit margin
Operating profit margin = (operating profit / sales revenue) x 100
Profit for the year margin
Profit for the year margin = (profit for the year / sales revenue) x 100
Return on capital employed
ROCE = (operating profit or profit before tax / total equity) + non current liabilities x 100
Current ratio
Current ratio = current assets / current liabilities
Gearing
Gearing = (non current liabilities / total equity) + non current liabilities x 100
Payables days
Payables days = payables / costs of sales x 365
Receivables days
Receivables days = receivables / annual revenue x 365
Inventory turnover
Inventory turnover = costs of goods sold / average inventories held
Concentration ratio
Concentration ratio = add up the market share if a specific number of business in that market e.g. top 3
Payback
Payback = add up the annual returns from an investment until the cumulative total equals the initial costs
Average rate of return
ARR = (total net return / number of years) / initial costs x 100
