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A2 Business > Ratio Meaning > Flashcards

Flashcards in Ratio Meaning Deck (20):
1

Asset Turnover

Measures how the assets of the business are being utilise to generate revenue.

2

Acid Test

A measure of a firm's short term survival i.e its ability to meet short term debts and day to day expenses. How easy they can pay off short term debts with assets

3

Average Rate of Return

An investment appraisal technique that calculates average profit as a percentage of the total cost of the initial investment.

4

Current Ratio

A measure of a firm's liquidity and short term survival i.e its ability to meet short term debts and day to day expenses

5

Dividend per Share

The return paid to the shareholders for each unit of their investment.

6

Dividend Yield

Measures the return on a shareholder's investment as a percentage of the current market price.

7

Float Time

The amount of extra time available to complete a non critical activity without delaying the project.

8

Gearing

A measure of the proportion of a business's capital that is funded through long term loans.

9

Gross Profit

Profit after cost of sales has been deducted and before expenses.

10

Inventory Turnover

Measures how efficiently a business replaces its stock in a year and hence whether stock is being used efficiently to generate sales.

11

Moving Averages

A method of market analysis which shows whether a trend is significant by smoothing out fluctuations.

12

Net Assets

The net worth of a business by the balancing of assets against liabilities.

13

Net Current Assets/Liabilities

The difference between Current Assets and Current Liabilities.

14

Net Present Value

An investment appraisal technique that calculates the total return on an investment taking into account the time value of money.

15

Net Profit Margin

A measure of Profitability that looks at operating profit as a percentage of sales revenue.

16

Payable Day's

Measures how long on average it takes a business to pay its suppliers it has purchased on credit.

17

Payback

An investment appraisal technique that measures how long it would take to pay back the cost of the initial investment.

18

Receivable Days

A measure of how long it takes a customer to pay for credit purchases.

19

ROCE

A measure of how efficiently a business is using its capital employed to generate profit. High figure better.

20

Working Capital

A measure of a firms liquidity / ability to meet day to day expenses.