Performance Indicators Flashcards
Gross profit margin
Gross profit/turnover x100%
Operating profit margin
Operating profit/turnover x 100%
Net profit margin
Net profit/turnover x100%
Return on net assets
Operating profit/ net assets x 100%
Return on capital employed
Operating profit/ capital employed x 100%
Asset turnover
Turnover/capital employed
Current ratio
Current assets(trade receivables, cash)/ current liabilities(trade payables, tax bill)
Shows how many times a company can pay off its debt
Quick ratio or acid test
Current assets (excluding inventory)/ current liabilities
Inventory days
Inventory/ cost of sales x 365 days or 12 months
Payable days
Payables/ cost of sales x365 days or 12 months
Receivable days
Receivables/ turnover x 365 days or 12 months
Gearing
Debt/equity x 100%
Higher the percentage the higher the debt, the higher the risk
Interest cover
Profit before interest/ interest
What does value added mean
Value added is the pool of wealth created by the business, it is often defined as: the value of revenue less the cost of bought in materials and resources
What would a balanced scorecard include
Financial
Customer
Internal
Innovation and learning
