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Principles of Financial Accounting > Ratios > Flashcards

Ratios Flashcards

1
Q

Gross margin profit =

A

(Gross profit / Revenue) x 100 (Profitability)

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2
Q

Operating margin =

A

(Operating profit / Revenue) x 100 (Profitability)

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3
Q

Net margin =

A

(Net profit / Revenue) x 100 (Profitability)

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4
Q

Asset turnover =

A

Revenue / Capital employed (Profitability)

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5
Q

Capital employed =

A

Shareholders funds + long term debt (equity + borrowings) (Profitability)

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6
Q

Return on capital employed =

A

Profit from operations / Average total capital employed by shareholders and lenders (Profitability)

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7
Q

Current ratio =

A

Current assets / current liabilities (Liquidity)

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8
Q

Quick ratio =

A

(Current assets - Inventory) / Current liabilities (Liquidity)

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9
Q

Gearing ratio =

A

(Debt / Capital employed) x 100 OR (Debt/ Equity) x 100 (Capital Structure Ratios)

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10
Q

Interest cover =

A

Profit before interest / Interest payable (Capital Structure Ratios)

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11
Q

Sales (capital turnover) =

A

Sales revenue / Average total capital employed (Efficiency)

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12
Q

Inventory days =

A

(Inventory / Cost of sales) x 365 (Efficiency)

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13
Q

Receivables days =

A

(Trade receivables / Sales on credit) x 365 (Efficiency)

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14
Q

Payables days =

A

(Trade payables / Pruchases on credit) x 365 (Efficiency)

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15
Q

Working capital ratio =

A

Inventory days + receivables days - payables days

= Total working capital days (Efficiency)

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16
Q

Dividend cover =

A

Earnings per share / Dividends per share (Investor Ratios)

17
Q

Dividend yield =

A

(Dividend per share / market price per share) x 100 (Investor Ratios)

18
Q

Earnings per share =

A

Profit attributable to ordinary shareholders / Number of ordinary shares (Investor Ratios)

19
Q

Price earnings ratio =

A

Market price of ordinary shares / Earnings per share (Investor Ratios)

Principles of Financial Accounting (6 decks)

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