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ACC1002: Accounting > Week 7: Analysing and Interpreting Financial Statements > Flashcards

Week 7: Analysing and Interpreting Financial Statements Flashcards

1
Q

How do you calculate Gross Profit Margin?

A

Gross Profit/ Sales Revenue * 100

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2
Q

How do you calculate Operating Profit Margin?

A

Operating Profit/ Sales Revenue * 100

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3
Q

How do you calculate Return on Capital Employed (ROCE)?

A

Operating Profit/ (Share Capital + Reserves + Non-Current Liabilities) * 100

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4
Q

How do you calculate Return on Ordinary Shareholders’ Funds (ROSF)?

A

Profit for the year (less any preference dividend)/ (Ordinary Share Capital + Reserves) * 100

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5
Q

How do you calculate Working Capital?

A

Current Assets - Current Liabilities

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6
Q

How do you calculate Average settlement period for trade receivables?

A

Average Trade Receivables/ Credit Sales Revenue * 365

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7
Q

How do you calculate Average settlement period for trade payables?

A

Average Trade Payables/ Credit Purchases * 365

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8
Q

How do you calculate Average Inventories’ turnover period?

A

Average Inventory/ Cost of Sales * 365

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9
Q

How do you calculate Current Ratio?

A

Current Assets/ Current Liabilities

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10
Q

How do you calculate Quick (or Acid-test) Ratio?

A

(Current Assets - Inventory)/ Current Liabilities

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11
Q

How do you calculate Gearing Ratio?

A

Non-current Liabilities/ (Share capital + Reserves + Non-current Liabilities)

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12
Q

How do you calculate Interest Cover Ratio?

A

Operating Profit/ Interest Payable

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13
Q

How do you calculate Earnings Per Share (EPS)?

A

Profit for the year (less any preference dividend) / Number of Ordinary Shares Issued

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14
Q

How do you calculate Dividend Pay-out Ratio?

A

Dividends Announced / Earnings Available for Dividends

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15
Q

How do you calculate Dividend Cover Ratio?

A

Earnings Available for Dividends / Dividends Announced

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16
Q

How do you calculate Dividend Yield Ratio?

A

Dividends per Share/ Market Value per Share

17
Q

How do you calculate Price/Earnings (P/E) Ratio?

A

Market Value per Share/ Earnings per Share (EPS)

18
Q

What are the five categories of Ratios and provide a brief explanation of each?

A
  1. Profitability: Assessing business’ effectiveness in generating profit
  2. Efficiency: Assessing business’ efficiency in using assets/resources
  3. Liquidity: Assessing business’ ability to meet short-term obligations
  4. Financial Gearing: Assessing the relationship between equity and debt financing
  5. Investment: Assessing returns to shareholders

ACC1002: Accounting (10 decks)

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