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16 Cards in this Set
- Front
- Back
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Income statement ratios: part 1 |
Gross profit margin Mark-up Rate of inventory turnover |
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Gross profit margin |
Gross profit —————- X 100 Revenue |
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Mark-up |
Gross profit —————- X 100 Cost of sales |
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Rate of inventory turnover |
Cost of sales —————— Average inventory |
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Income statement ratios: part 2 |
Profit margin Overhead to turnover |
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Profit margin |
Profit ——— X 100 Revenue |
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Overhead to turnover |
Overhead ————— X 100 Revenue |
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Statement of financial position (balance sheet) ratios |
Return on capital employed Net current assets ratio (current ratio or working capital ratio) Liquid capital ratio (acid test ratio) Receivable days Payable days Gearing |
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Return on capital employed for a sole trader |
Profit ——— X 100 Capital Note: normally the opening capital is used, but if not available it is possible to use closing capital. |
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Return on capital employed for limited company |
Profit before interest and tax (Operating profit) ———————————— X 100 Capital employed |
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Net current assets ratio (current ratio or working capital ratio) |
Current assets : Current liabilities |
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Liquid capital ratio (acid test ratio) |
Liquid capital : Current liabilities (Liquid capital is current assets excluding inventories) |
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Receivable days |
Trade receivables ————————- X 365 Credit sales |
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Payable days |
Trade payables ———————- X 365 Credit purchases |
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Gearing |
Fixed return financing ——————————- X 100 All sources of finance |
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Gearing for a limited company |
Preference shares + Non-current liabilities (e.g. debentures) ———————————— X 100 Preference & Ordinary shares + Reserved + Non-current liabilities |
