Lecture 3 - Interpretation Flashcards
(28 cards)
Preference shares are
- A special type of share
- Offers a guaranteed return
- Often excluded from ratios as they are a form of long term finance
- Higher priority of ordinary shares
Return on equity
Profit attributable to shareholders/Equity x100
Return on capital employed (ROCE)
Operating profit (PBIT) / (Total assets - current liabilities) x100
Operating profit margin
Operating profit (PBIT) / revenue x100
Gross profit margin
Gross profit / revenue x100
Asset turnover
Revenue / Total assets - current liabilities = £ or times
Non-current asset turnover
Revenue / non-current assets
Average inventory
(Opening inv + closing inv)/2
Average inventories turnover period
Average inventories / cost of sales x365
Inventories turnover
Cost of sales / average stock
Days receivables
Receivables / revenue x365
Days payables
Payables / value of purchases (COGS) x365
Working capital
Current assets - current liabilities
Working capital cycle
Inventory days + revivable days - payable days
Average inventory turnover
Cost of sales / average inventories x365
Current ratio
Current assets / current liabilities
Quick or acid test ratio
(Current assets - inventories) / current liabilities
Gearing ratio
Non-current liabilities / Total equity + non current liabilities x100
Debt to equity ratio
Debt / equity x100
Share volume
The number of ordinary shares in circulation
Interest cover (times)
Profit from operations / finance costs
Dividend cover
Net profit after tax and preference dividend / ordinary dividends paid and proposed
Dividend yield
Dividend per share / market price per share x100
Earnings per share
Profit after tax and preference dividend / number of issued ordinary shares
