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Financial Accounting > Lecture 3 - Interpretation > Flashcards

Lecture 3 - Interpretation Flashcards

1
Q

Preference shares are

A
  • 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
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2
Q

Return on equity

A

Profit attributable to shareholders/Equity x100

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3
Q

Return on capital employed (ROCE)

A

Operating profit (PBIT) / (Total assets - current liabilities) x100

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4
Q

Operating profit margin

A

Operating profit (PBIT) / revenue x100

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5
Q

Gross profit margin

A

Gross profit / revenue x100

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6
Q

Asset turnover

A

Revenue / Total assets - current liabilities = £ or times

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7
Q

Non-current asset turnover

A

Revenue / non-current assets

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8
Q

Average inventory

A

(Opening inv + closing inv)/2

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9
Q

Average inventories turnover period

A

Average inventories / cost of sales x365

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10
Q

Inventories turnover

A

Cost of sales / average stock

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11
Q

Days receivables

A

Receivables / revenue x365

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12
Q

Days payables

A

Payables / value of purchases (COGS) x365

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13
Q

Working capital

A

Current assets - current liabilities

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14
Q

Working capital cycle

A

Inventory days + revivable days - payable days

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15
Q

Average inventory turnover

A

Cost of sales / average inventories x365

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16
Q

Current ratio

A

Current assets / current liabilities

17
Q

Quick or acid test ratio

A

(Current assets - inventories) / current liabilities

18
Q

Gearing ratio

A

Non-current liabilities / Total equity + non current liabilities x100

19
Q

Debt to equity ratio

A

Debt / equity x100

20
Q

Share volume

A

The number of ordinary shares in circulation

21
Q

Interest cover (times)

A

Profit from operations / finance costs

22
Q

Dividend cover

A

Net profit after tax and preference dividend / ordinary dividends paid and proposed

23
Q

Dividend yield

A

Dividend per share / market price per share x100

24
Q

Earnings per share

A

Profit after tax and preference dividend / number of issued ordinary shares

25
Q

Price/Earnings ratio

A

Market price per share / earnings per share

26
Q

Cash flow ratio

A

Total cash inflows / total cash outflows

27
Q

Working capital ratio

A

Inventory + trade receivables - trade payables / revenue x100

28
Q

Interest cover

A

Cash generated from operations / interest

Financial Accounting (3 decks)

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