Book 2 Flashcards Preview

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Flashcards in Book 2 Deck (20):
1

How to calculate current assets from balance sheets

Inventories + receivable + cash and other cash equivalents

2

What is the balance sheet formula for working capital (net current assets)

Current assets - current liabilities

3

What is the formula for net assets in balance sheets

Non-current assets + current assets - current liabilities - non current liabilities

4

Formula for net worth in balance sheets

Non-current assets + working capital (net current assets) - non current liabilities

5

Formula for assets employed

Net current assets + non current assets

6

Formula for total equity

Share capital + reserves

7

Calculation for capital employed

Total equity + non-current liabilities

8

Calculate assets employed

Capital employed

9

What is the formula for assets

Liabilities + equity

10

Formula for operating profit

Gross profit - expense +/- exceptional items

11

Calculation for profit before tax

Operating profit + finance income - finance costs

12

Formula for profit for the year

Profit before tax - taxation

13

What is the formula for ROCE

RETURN OF CAPITAL EMPLOYED (%)

Operating profit or profit before tax
-------------------------- total equity + non current liabilities

X100

14

How is current ration calculated?

Current assets:current liabilities

15

What is the formula for gearing ratio?

Non-current liabilities
--------------------------
Total equity + non current liabilities

X100

16

How do you calculate payable days?

Payables
-------------------------
Costs of sales

X365

17

What formula calculates receivable days

Receivables
--------------------------
Revenue (annual sales)

X365

18

How do you calculate inventory turnover?

Cost of goods sold
--------------------------
Average inventories held

19

What is the formula for the average rate of return? (ARR%)

Total net return or surplus from a project/no. Of years
---------------------------
Initial cost

X100

20

How do you calculate payback period

Adding Annual returns from an investment (annual cost - net return = cumulative returns) until the cumulative return goes positive