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Flashcards in Financial Ratios Deck (25)
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1

What is the equation for gross profit margin

Gross profit/revenue x100

2

What is the equation for operating profit margin

Operating profit/revenue x100

3

What is the equation for profit for the year margin

Profit for the year/revenue x100

4

What is the equation for current ratio

Current assets / current liabilities

5

What is the equation for gearing

Non current liabilities / total equity + non current liabilities x100

6

What is the equation for payable days

Payables / cost of sales x365

7

What is the equation for receivables days

Receivables / revenue x365

8

What is the equation for inventory turnover

Cost of sales / average inventories held

9

What is cash flow

The movements of cash into and out of a business over a period of time

10

What is cash flow forecast

State the inflows and outflows of cash that the managers of a business expect over some future period

11

What is profit

The surplus of total revenue over total costs for a business over a trading period

12

What is capital structure

The way in which a business has raised the capital it requires to purchase its assets

13

What is contribution

The difference between revenue and variable costs

14

What is profitability

A measure of financial performance that compares a business’s profits to some other factors such as revenue

15

What is profit quality

The extent to which a particular type of profit is sustainable

16

What is profit margin

A ratio that expresses a business’s profit as a percentage of its revenue over some trading period

17

What is ratio analysis

A technique for analysing a business’s financial performance by comparing one piece of accounting information with another

18

What are assets

Items owned by the business

19

What are liabilities

Money owed by a business

20

What is an overdraft

When a business is allowed to spend more than it holds in its current account up to an agreed limit

21

What is venture capital

Funds advanced to businesses in the form of share and loan capital

22

What is share capital

Finance invested into a company as a result of the sale of shares in the business

23

What are debentures

Loans with fixed interest rates that are long term

24

What is working capital

Current assets minus current liabilities

25

What is depreciation

The reduction of the value of an asset over a period of time