Synoptic Flashcards
(53 cards)
Gross Profit Margin
Gross Profit / Revenue X 100
= %
For every £1 of sales, the % converted to gross profit
ONLY SALES & COST OF SALES
Operating Profit Margin
Operating Profit / Revenue X 100
= %
For every £1 of sales, the % converted to operating profit
DISTRIBUTION & ADMIN EXPENSES
Net Profit Margin
Net Profit / Revenue X 100
= %
For every £1 of sales, the % converted to net profit
TAX
Specified Expense Ratio
Specified Expense / Revenue X 100
=%
For every £1 of sales, the % spent on a specific expense
Return On Capital Employed
Profit From Operations / Capital Employed X 100
= %
Shows profit made from long term funding / investment
Capital Employed = Total Equity + NCL
OR
Total Assets - CL
Return On Net Assets OR Shareholders Funds
Net Profit / Equity X 100
= %
Showing the profit made (goes to retained earnings) from equity only
Asset Turnover
Revenue / Capital Employed
= no of times
The amount of times the long term funding is converted to revenue
Capital Employed = Total Equity + NCL
OR
Total Assets - CL
Non Current Asset Turnover
Revenue / NBV of Non Current Assets
Shows how much revenue is generated from assets
Total Asset Turnover
Revenue / Total Assets
Shows how much revenue is generated from assets
Current Ratio
Current Assets / Current Liabilities
= X:1
How the many times the Current Assets would cover Current Liabilities
Ideal 2:1
Measure of liquidity
Quick Ratio (Acid Test)
Current Assets - Inventory / Current Liabilities
= X:1
How the many times the Current Assets, without inventory, would cover Current Liabilities
Inventory is the least liquid / slowest moving asset
Ideal 1:1
Measure of liquidity
Inventory Holding Period (Inventory Days)
Closing Inventory / Cost of Sales X 365
= X Days
Average days inventory is held in the stock room
Inventory Turnover
Cost of Sales / Closing Inventory
How many times the stock room has been refilled
Trade Receivables Collection Period (Receivable Days)
Trade Receivables / Credit Sales X 365
= X days
The average time to collect money from credit customers
Puts pressure on credit control
Trade Payables Collection Period (Payable Days)
Trade Payables / Cost of Sales X 365
= X days
Average time to pay credit suppliers
Working Capital Cycle
Inventory Days + Receivable Days - Payable Days
The days the company has to fund itself
Interest Cover
Profit From Operations / Finance Costs
The amount of times the profit can cover the finance costs
Gearing Ratio
Non Current Liabilities / Equity + Non Current Liabilities X 100
= %
The % of the company that is funded by debt
High gearing = High risk
8 Control Activities
Supervision
Personnel
Authorisation & Approval
Management
Segregation of Duties
Organisational Structure
Accounting & Mathematical checks
Physical
Control Activities: Supervision
Supervisors
CCTV
Remote computer access
Control Activities: Personnel
Getting right people for the right job
Qualifications
DBS
References
Criminal conviction check
Control Activities: Authorisation & Approval
Who can approve?
Credit limits
Method of approval
Number of people to authorise
Control Activities: Management
Different levels and responsibilities of managers
Control Activities: Segregation of Duties
Break down a task to have more people involved
Reduces error / fraud
Potential of collusion - 2 or more people working together to commit fraud
