# Financial Ratios Flashcards

1
Q

What is the equation for gross profit margin

A

Gross profit/revenue x100

2
Q

What is the equation for operating profit margin

A

Operating profit/revenue x100

3
Q

What is the equation for profit for the year margin

A

Profit for the year/revenue x100

4
Q

What is the equation for current ratio

A

Current assets / current liabilities

5
Q

What is the equation for gearing

A

Non current liabilities / total equity + non current liabilities x100

6
Q

What is the equation for payable days

A

Payables / cost of sales x365

7
Q

What is the equation for receivables days

A

Receivables / revenue x365

8
Q

What is the equation for inventory turnover

A

Cost of sales / average inventories held

9
Q

What is cash flow

A

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

10
Q

What is cash flow forecast

A

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

11
Q

What is profit

A

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

12
Q

What is capital structure

A

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

13
Q

What is contribution

A

The difference between revenue and variable costs

14
Q

What is profitability

A

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

15
Q

What is profit quality

A

The extent to which a particular type of profit is sustainable

16
Q

What is profit margin

A

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

17
Q

What is ratio analysis

A

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

18
Q

What are assets

A

19
Q

What are liabilities

A

20
Q

What is an overdraft

A

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

21
Q

What is venture capital

A

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

22
Q

What is share capital

A

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

23
Q

What are debentures

A

Loans with fixed interest rates that are long term

24
Q

What is working capital

A

Current assets minus current liabilities

25
Q

What is depreciation

A

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