Financial Statements Ratios, IAS & IFRS Flashcards
(29 cards)
IAS 1
Requirements For Company Financial Statements
SPL + other comprehensive income
SFP
Statement of changes in equity
Statement of cashflows
Notes to the accounts
IAS 2
Inventories
Inventory is valued at the lower of cost or net realisable value
Cannot use LIFO
IAS 36
Impairment Of Assets
Compare carrying amount against the greater of
Fair selling value
Value in use
Dr - Impairment expense
Cr - Asset
IAS 16
Property, Plant & Equipment
Cost = purchase price + directly attributable costs
NOT TRAINING
Land is not depreciated
IFRS 16
Leases
Long term rental, right to use asset but does not belong to us.
1) Account for asset (deposit & liability)
Dr - Asset
Cr - Lease Liability / Bank (deposit)
2) Work out depreciation policy over the right of use period
3) Unwind the liability - account for payments & interest each year
Payment
Dr - Lease Liability
Cr - Bank
Interest
Dr - Finance Costs
Cr - Lease Liability
4) Split the liability into current and non current
Paying In Advance
CL = Payment
NCL = Difference
Paying In Arrears
CL = Difference
NCL = Next Years Balance
Gross Profit Margin
Gross Profit / Revenue X 100
= %
For every £1 of sales, the % converted to gross profit
ONLY SALES & COST OF SALES
Operating Profit Margin
Operating Profit / Revenue X 100
= %
For every £1 of sales, the % converted to operating profit
DISTRIBUTION & ADMIN EXPENSES
Net Profit Margin
Net Profit / Revenue X 100
= %
For every £1 of sales, the % converted to net profit
TAX
Specified Expense Ratio
Specified Expense / Revenue X 100
=%
For every £1 of sales, the % spent on a specific expense
Return On Capital Employed
Profit From Operations / Capital Employed X 100
= %
Shows profit made from long term funding / investment
Capital Employed = Total Equity + NCL
OR
Total Assets - CL
Return On Net Assets OR Shareholders Funds
Net Profit / Equity X 100
= %
Showing the profit made (goes to retained earnings) from equity only
Asset Turnover
Revenue / Capital Employed
= no of times
The amount of times the long term funding is converted to revenue
Capital Employed = Total Equity + NCL
OR
Total Assets - CL
Non Current Asset Turnover
Revenue / NBV of Non Current Assets
Shows how much revenue is generated from assets
Total Asset Turnover
Revenue / Total Assets
Shows how much revenue is generated from assets
Current Ratio
Current Assets / Current Liabilities
= X:1
How the many times the Current Assets would cover Current Liabilities
Ideal 2:1
Measure of liquidity
Quick Ratio (Acid Test)
Current Assets - Inventory / Current Liabilities
= X:1
How the many times the Current Assets, without inventory, would cover Current Liabilities
Inventory is the least liquid / slowest moving asset
Ideal 1:1
Measure of liquidity
Inventory Holding Period (Inventory Days)
Closing Inventory / Cost of Sales X 365
= X Days
Average days inventory is held in the stock room
Inventory Turnover
Cost of Sales / Closing Inventory
How many times the stock room has been refilled
Trade Receivables Collection Period (Receivable Days)
Trade Receivables / Credit Sales X 365
= X days
The average time to collect money from credit customers
Puts pressure on credit control
Trade Payables Collection Period (Payable Days)
Trade Payables / Cost of Sales X 365
= X days
Average time to pay credit suppliers
Working Capital Cycle
Inventory Days + Receivable Days - Payable Days
The days the company has to fund itself
Interest Cover
Profit From Operations / Finance Costs
The amount of times the profit can cover the finance costs
Gearing Ratio
Non Current Liabilities / Equity + Non Current Liabilities X 100
= %
The % of the company that is funded by debt
High gearing = High risk
IAS 38
Intangible Assets
