Ratio Analysis Flashcards
(25 cards)
What is the formula for ROCE?
Profit before interest and tax / capital employed
What is the formula for ROE?
Profit for shareholders / Equity
What is the formula for gross profit margin?
Gross profit / sales
What is the formula for net profit sales?
Profit / sales
What is the formula for current ratio?
Current assets / current liabilities
What is the formula for quick ratio?
Current assets - inventories / current liabilities
What is the formula for asset turnover?
Sales / capital employed
What is the formula for inventory holding period?
(Average inventory / cost of sales ) x 365
What is the formula for receivables collection period?
(Receivables / credit sales) x 365
What is the formula for payables payment period?
(Payables / credit purchases) x 365
What is the formula for earnings per share?
Profit after tax / number of ordinary shares in issue
What is the formula for price earnings ratio?
Market price per ordinary share / earning per share
What is the formula for dividend cover?
Profit after tax - preference dividends / ordinary shares
What is the formula for dividend yield?
(Dividend per ordinary share / market price per ordinary share) x 100%
What is the formula for interest cover?
Profit before interest and tax / interest payable
How do you find the capital employed?
After the overdraft without a heading
What is the net assets heading?
Net operating profit
What is the formula for dividend per share?
Dividends / number of ordinary shares
What headings do you include when writing a report on ratio analysis?
- Profitability
- Liquidity
- Efficiency
- Gearing
- Investors returns
- Summary at the end of
What ratios are used to describe profitability?
And what do you explain?
- ROCE
- Net profit margin
- Gross profit margin
- Asset turnover
Why profitability improved or worsened
What ratios are used to describe efficiency?
And what do you explain?
- Inventory turnover period
- Receivables collection period
- Payables payment period
How long stock is held, is the business taking longer to pay suppliers, are customers paying faster or slower?
What ratios are used to describe liquidity?
And what do you explain?
- Current ratio
- Quick ratio
Is the company able to pay off debts? Compare the ratios
What ratios are used to describe gearing?
And what do you explain?
- Interest cover
How much of the company is financed by debt?
Talk about wether the company has become more risky financially
What ratios are used to describe investor returns?
And what do you explain?
- Dividend cover
- Earning/dividend per share
Are shareholders earning more or less? Mentioned if returns improved or not
