Flashcards
Accounting Calculations
Cards in this deck (27)
- 1Current ratioA measure of short-term
liquidity. Indicates the ability of
an entity to meet its short-term
debts from its current assets
Current assets / Current liabilities - 2Quick ratioA more rigorous measure of
short-term liquidity. Indicates
the ability of the entity to meet
unexpected demands from
liquid current assets.
Cash assets + Receivables/
Current liabilities - 3Receivables turnoverMeasures the effectiveness of
collections; used to evaluate
whether receivables balance is
excessive.
Net credit sales income/
Average receivables balance - 4Average collection periodMeasures the average number
of days taken by an entity to
collect its receivables.
365 /
Receivables turnover - 5Inventory turnoverr Indicates the liquidity of
inventory. Measures the number
of times inventory was sold on
the average during the period
Cost of sales/
Average inventory balance - 6Average days to sellMeasures the average number
of days taken by an entity to sell
its inventory.
365 /
Inventory turnover - 7Operating cycleMeasure of the total average
time it takes from the receipt of
inventory to the point at which
the customer pays the debt. It is
a measure of the overall
efficiency of a retail firm’s core
operations.
Average collection period + Average days to sell - 8Return on total assetsMeasures rate or return earned
through operating total assets
provided by both creditors and
owners.
Profit from ordinary activities before income tax +
Borrowing costs/
Average total assets - 9Return on ordinary shareholders’ equityMeasures rate of return earned
on assets provided by owners
Profit – Preference dividends /
Average ordinary equity - 10Profit marginMeasures profitability of each
dollar of sales.
Profit from ordinary activities after income tax/
Income - 11Gross profit marginMeasures the gross profit
earned per dollar of sales.
Gross profit/
Sales - 12Expense ratioAttempts to measure the
proportion of a specific expense
type as a proportion of sales.
Selling expense/
Income - 13Debt ratioMeasures percentage of assets
provided by creditors and
extent of using gearing.
Total liabilities/
Total assets - 14Equity ratioMeasures percentage of assets
provided by shareholders and
the extent of using gearing.
Total equity
Total assets - 15Capitalisation ratioThe reciprocal of the equity
ratio and thus measures the
same thing.
Total assets
Total equity - 16Times interest earnedMeasures the ability of the
entity to meet its interest
payments on borrowings out of
current profits.
Profit from ordinary activities before tax +
Borrowing costs/
Borrowing costs - 17Asset turnover ratioo Measures the effectiveness of
an entity in using its assets
during the period.
Income/
Average total assets - 18Statement of cash flows (Cash Received from Customers)Sales
+ Opening Accounts Receivable _________
– Bad debts expense _________
– Discounts Allowed _________
– Closing Accounts Receivables _________
= Cash Received from Customers - 19Statement of cash flows (Payments for inventory)COS/(COGS)
– opening Inventory _________
+ closing Inventory _________
(purchases)
+ opening Accounts Payable _________
– closing Accounts Payable _________ (Payments)
– Discount Received _________
-(Purchase Returns)
Cash Payments for inventory - 20Statement of cash flows (Payments for expenses)General / Operating Expenses
- opening Prepaid _________
+ closing Prepaid _________
+ Opening Accruals _________
– Closing Accruals _________
Cash Payments for expenses - 21Statement of cash flows (Cash Payments to suppliers and employees)Cash Payments for inventory
+
Cash Payments for expenses - 22Statement of cash flows (Cash payments for non-current assets)Closing balance of non
-
current assets opening balance of non-current - 23Statement of cash flows (Proceeds from sale of non-current assets)Specific information about the sale transaction required—actual receipt of cash recorded in cashflow statement, not gain or loss on sale
- 24Statement of cash flows (Sole Proprietor - Drawings)Opening Capital _________
+ Profit _________
- Drawings _________
- Closing Capital - 25Statement of cash flows(Income taxes paid)Income Tax Expense _________
+ Opening Tax Payable _________
– Closing Tax Payable _________
Cash Payments for tax - 26Statement of cash flows (Long term Investments )Opening Long-term investments _________
– Long-term investments sold during the year (original cost) _________
- Closing Long-term investments _________
Cash Payments for Long-term investments - 27Statement of cash flows (Dividends paid)Dividends Paid in Cash
Opening Retained earnings _________
+ Profit _________
Available for dividends _________
– Closing Retained earnings _________
Dividends paid during the year
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- Flashcards on Accounting Calculations, created by Brendan Dilworth on 22/05/2019.
- Created by
- Brendan Dilworth
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