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Flashcards

Ratios & Limitings - E

D A English 61 cards

Cards in this deck (61)

  1. 1Key to obtaining meaningful information from ratio analysis isComparison
  2. 2What other information is neededContent of accompanying commentary
    Age and nature of the company assets
    Development of the company markets
    Unusual items disclosed
  3. 3What is better PBIT or PATPBIT due to unusual variations of tax
  4. 4PBIT ISPROFIT BEFORE TAX + FINANCE COSTS
  5. 5ROCEPBIT/CAPITAL EMPLOYED
  6. 6Capital employedSharehold equity + Non current liability
  7. 7What can the ROCE tell us?Change in ROCE from one year to next
    ROCE is being earn by other companies
    Comparison of the ROCE with current market borrowing rate
    Yhe ratio measures how well a company is generating profits from its capita
  8. 8ROEPAIT/EQUITY
    100%.
  9. 9Profit Margin2.5 from 1 is better than 1 from 10
  10. 10Asse t turnoverCapital employed 100
    Revenue 400
    Capital employed 100
    Revenue 200
  11. 11Asse t turnover*Profit MarginROCE
  12. 12You cannot have Asse t turnover OR Profit Margin on their ownYou cannot have Asse t turnover OR Profit Margin on their own
  13. 13High profit margin meansSales price could be high, so sales revenue s depressed so asset tunover is lower
  14. 14High asset turnoverKeep prices down which could lead to low profit margin
  15. 15Debt ratioshow much company owes in relation to its size
  16. 16Debt ratio #2Ratio of a company total debts to its total assets
  17. 17Issued share capital can be divided toOrdinary shares + Equity
    Non redeemable shares
  18. 18Leverage = GearingLeverage = Gearing
  19. 19Equity to asset ratio =(Shareholder equity/Total assets - Current liability)*100%
  20. 20Equity to Asset ratioMirror image of gearings
  21. 21The more higher geared the companythe greater the risk that little will be available to distribute by way of dividend to the ordinary shareholders
  22. 22Interest CoverPBIT / Interest charges
  23. 23Net cash flowAmount of cash which company has coming into the business from operations
  24. 24Total debtsshort term and long term payables including provison
  25. 25Liquidityamount of cash a company can put its hand s on quickly to settle its debts
  26. 26Liquid fundsCash
    Short term investment
    Fixed term deposit with a bank or other finaincal institution
    Trade receiveable
    Bills of exchange receveiable
  27. 27Cash cycleCashflow in and out of a business
  28. 28Cash flow can be postponed byTaking Credit
    Turned into receiveable
  29. 29Time between purchase and sale makes a differenceTime between purchase and sale makes a difference
  30. 30Why arer receipts delayed?Holding inventories and having receiveables
  31. 31Taking credit from other creditors can be a reason why cash payments are delayedTaking credit from other creditors can be a reason why cash payments are delayed
  32. 32Current ratioCurrent assets/Current Liabilities
  33. 33Qucik ratio(Current assets - Inventory)/ Current Liabilties
  34. 34Receveiable day(Trade receiveable/Sales)*365
  35. 35Inventory turnover(Inventory/Cost of sales)*365
  36. 36Account payable(Trade payable/Purchase)*365
  37. 37Dividend cover is the ratio foEarning per share/Dividen per ordinary share
  38. 38Price/Earnings per shareShareprice/Earnings per share
  39. 39Dividend Yield(Dividend on the share of the year/
    Current market value) *100%
  40. 40Financial statements negative influencesManiplution and hisotrical costing
  41. 41Changing account policy you can go through creating accountingChanging account policy you can go through creating accounting
  42. 42Companies with low profit margins tend to havehigh asset turnover,
  43. 43while those with high profit margins havelow asset turnover.
  44. 44Dividend on the share of the yearIntern + Equity Dividend
  45. 45Profit MarginROCE/ASSET TURNOVER
  46. 46Finance Costs =Interest
  47. 47Gearingrefers to the relationship, or ratio, of a company's debt to equity.
  48. 48Asset turnover is the ratioAsset turnover is the ratio of total sales or revenue to average assets.
    REVENUE/CAPITAL EMPLOYED
  49. 49Seaosnable fluctuations does not affect year on year changes on inventorySeaosnable fluctuations does not affect year on year changes on inventor
  50. 50How to Reduce GearingTreating lease as short - rental agreement
    Selling an asset under a sale and leaseback agreement
    Repaying a loan before EoY and taking it out again at the beginning of the next year
  51. 51How does a leaseback impact the SOFPRemoves assets from the sofp
  52. 52Recourse trasacation will still be shown in the sofp. under trade receiveablesRecourse trasacation will still be shown in the sofp. under trade receiveables
  53. 53Charities are NOT funded by the governmentCharities are NOT funded by the government
  54. 54Non for profit main priorityNon financial KPI
  55. 55Non for profit shareholders are interested in their earnings. T/FTRUE
  56. 56P/E why is it measuredMarket confidence
  57. 57NCA turnoverCompanies with high NCA value (Manufacturing)
  58. 58GearingLong term solvency
  59. 59Current ratrioLiquidity
  60. 60ASSET TURNOVERREVENUE/AVERAGE ASSETS*
  61. 61—

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Description
Flashcards on Ratios & Limitings - E, created by D A on 20/04/2019.
Created by
D A · Apr 2019
Updated
Apr 22, 2019
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