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Flashcards in Finance Equations Deck (16)
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1

What is the Accounting Equation (Assets)?

Liabilities + Equity

2

What are the 4 Profitability Ratios?

Return on Capital Employed (ROCE)
Gross Profit Margin
Operating Profit Margin
Net Asset Turnover

3

What's the formula for Return on Capital Employed (ROCE)?

Operating Profit / (Equity funds + Non-Current Liabilities)

4

Whats the formula for Gross Profit Margin?

(Gross Profit / Turnover) x 100

5

What's the formula for Operating Profit Margin?

(Operating Profit / Turnover) x 100

6

What's the formula for Net Asset Turnover?

Turnover / (Equity + Non-Current Liabilities)

7

How is ROCE related to Net Asset Turnover?

ROCE = Operating Profit Margin x Net Asset Turnover

8

What's the formula for Inventory Days?

(Closing Inventory / Cost of sales) x 365 days

9

What's the formula for Trade Receivable Days (Collection Period)?

(Closing Trade Receivables / Revenue) x 365 days

10

What's the formula for Trade Payable Days (Payment Period)?

(Closing Trade Payables / Cost of Sales) x 365 days

11

What's the formula for Current Ratio?

Current Assets / Current Liabilities

12

What's the formula for Quick (Acid Test) Ratio?

(Current Assets - Inventory) / Current Liabilities

13

What's the formula for Gearing?

Debt / Equity

14

What's the formula for Interest Cover?

Operating Profit / Finance Cost

15

What's the formula for Dividend Cover?

Profit for the Year / Dividend

16

What is the Gearing Ratio also equal to?

(Loans + Overdrafts) / (Share Capital + Reserves)