Flashcards
RATIOS
Cards in this deck (9)
- 1Current ratioCurrent Assets/Current Liabilities
- 2Acid-test ratio(CA-Stock)/CL
- 3Raw materials stock periodAverage value of raw materials/usage of raw materials per day
- 4WIP periodAverage value of WIP /cost of goods sold per day
- 5Finished goods periodAverage value of fin goods /cost of goods sold per day or:
Stock/cost of goods sold x 365 - 6Debtor turnoveraverage value of debtors/
average value of sales per day or:
Debtors/sales x 365 - 7Creditor turnoveraverage value of creditors/
purchases on credit per day or:
Creditors/purchases x 365 - 8ROCEprofit Before Interest & Tax
÷
Capital Employed
Capital Employed is :
(Shareholders' funds + long-term liabilities)
or
(Total Assets -Current Liabilities) - 9What should you look at with ROCE ?1. Change from oneyear to next
2. Roce earned by other companies
3. Compare with current market borrowing rates . nb: Roce often reflect higher risk than borrowings.
i) What would the cost of extra borrowing to the company be if neededand is it earning an Roce that suggests itcould make enough profits to make such borrowing worthwhile ?
ii ) Is the company making a Roce which suggests that it is making profitable use of its current borrowing ?
Information
- Description
- User has deleted their subject information Flashcards on RATIOS, created by Deleted user on 11/01/2017.
- Created by
- Deleted user · Jan 2017
- Updated
- Jan 12, 2017
- Views
- 31
- History
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- Created by Denise Harper · Sep 1, 2014
- Copied by Denise H · Jan 11, 2017
- Rating