Chapter 5 Formulae

Question 1

Return on total assets

Answer 1

Question 2

Return on shareholders’ equity

Question 3

Return on debt capital

Question 4

Return on investments

Question 5

Gross Profit margin

Question 6

Operating profit margin

Question 7

EBIT-margin

Question 8

Net profit margin

Question 9

Current ratio

Question 10

Acid test ratio

Question 11

Turnover ratio

Question 12

Time of current assets

Question 13

PPE turnover ratio

Answer 13

An indication of the efficiency with which a company’s PPE is utilised to generate turnover.

Question 14

Turnover ratio (PPE)

Question 15

PPE Turnover time

Question 16

Turnover ratio of trade receivables

Question 17

Turnover time of trade receivables

Question 18

Turnover ratio of inventory

Question 19

Turnover time of inventory

Question 20

Debt-to-assets ratio

Question 21

Finance cost coverage

Question 22

Ordinary dividend coverage

Question 23

Earnings per share

Answer 23

Indication of the attributable earnings earned per share during the year.

Question 24

Earnings yield

Answer 24

An indication of the earnings earned by the shareholders on the market price of the share.

Question 25

Dividend per share

Answer 25

Indicates what amount per share was received in the form of dividends [](http://www.codecogs.com/eqnedit.php?latex=%5Cfrac%7BOrdinary%5C&space;dividends%5C&space;declared%7D%7BAverage%5C&space;number%5C&space;of%5C&space;ordinary%5C&space;shares%5C&space;issued%7D)

Question 26

Dividend yield

Answer 26

[](http://www.codecogs.com/eqnedit.php?latex=%5Cfrac%7BDividend%5C&space;per%5C&space;share%7D%7BMarket%5C&space;price%5C&space;per%5C&space;share%7D%5Ctimes100)

Question 27

Price-earnings ratio

Answer 27

Indicates how much an investor is willing to pay for each R1 earnings per share that is earned by the enterprise. [](http://www.codecogs.com/eqnedit.php?latex=%5Cfrac%7BMarket%5C&space;price%5C&space;per%5C&space;share%7D%7BEarnings%5C&space;per%5C&space;share%7D)

Question 28

Book value per share

Answer 28

Calculates what statement of financial position value each share should have if all debt capital is repaid. [](http://www.codecogs.com/eqnedit.php?latex=%5Cfrac%7BShareholders'%5C&space;equity%5C&space;-%5C&space;preference%5C&space;shares%5C&space;-%5C&space;immaterial%5C&space;assets%7D%7BNumber%5C&space;of%5C&space;ordinary%5C&space;shares%5C&space;issued%7D)