Interpretation of Financial Statements Flashcards
1
Q
What does profability mean?
A
The relationship between profit and revenue, assets, equity and capital employed.
2
Q
What does liquidity mean?
A
stability of company on a short term basis.
3
Q
What are some ratios to measure profability?
A
- Gross Profit Percentage
- Expenses/revenue Percentage
- Operating Profit Percentage
- ROCE
- Return on Shareholders funds
4
Q
What are some ratios to measure liquidity?
A
- Current Ratio
- Acid Test Ratio
5
Q
What are some ratios to measure use of resources?
A
- Inventory Turnover and holding period
- Trade receivable collection period
- Trade payables payment period
- Working capital cycle
- Asset Turnover ratios
6
Q
What are some ratios to measure financial position?
A
- Interest cover
- Gearing
