4: Analysis of financial statements Flashcards
What are the four performance ratios?
Gross profit margin
Operating profit margin
ROCE
Net asset turnover
What is gross profit margin?
(Gross profit) ÷ (Reveune) x 100
What is gross profit margin?
(Gross profit) ÷ (Revenue) x 100
What is operating profit margin
(Operating profit) ÷ (Revenue) x 100
What is return on capital employed (ROCE)?
(PBIT) ÷ (Capital Employed) x100%
What is capital employed?
Equity + Long term debt + ST lease liability
What is Net asset turnover?
(Sales revenue) ÷ (Capital Employed)
times p/a
What are the five Financial Position ratios?
Current ratio Quick ratio Inventory turnover period Receivable collection period Payables payment period
Current ratio
Current assets ÷ Current liabilities
Quick ratio
(Current assets-Inventory) ÷ Current Liabilities
Inventory turnover period
Inventory ÷ Cost of sales x 365
Receivable collection period
Trade receivables ÷ Credit sales X 365 days
Payables payment period
Trade payables ÷ Credit purchases X 365 days
What are the ratios for long term financial stability?
Gearing
Interest cover
Gearing 1
(Loans + Preference share capital) ÷ (Ordinary share capital + reserves +Non-controlling interest)
