Flashcards
Accounting flashcards
Cards in this deck (8)
- 1Profitability ratios: ROCE Gross Profit Ratio Net Profit RatioReturn on Invested Capital=Profit before interest and tax/Equity+NCL=Operating Profit/Assets-Current Liabilities
Gross Profit Ratio= Gross Profit/Revenue
Net Profit Ratio=Profit before tax/Revenue - 2Efficiency ratios Debt Collection Period Creditor payment period Inventories turnover ratio Asset turnover ratioDebt collection period: measures how long it takes customers to pay = Average trade receivables/credit sales per day
Creditor payment period measures how long it takes to pay suppliers = average trade payables/credit purchases per day
Inventories ratio measures how long inventories move through business= cost of sales/average inventory
Asset turnover ratio compares revenue to total assets employed = Revenue/Average total assets - 3Liquidity ratios and gearing Current ratio Quick ratio GearingCurrent ratio measures ST liquidity =Current assets/Current liabilities
Quick ratio measures extremely quick liquidity=Current assets-inventory/current liabilities
Gearing measures relationship between LT borrowing and total assets= LT borrowings/Total capital
*LT borrowings: debentures + preference share capital
*Total capital= share capital+borrowings+reserves - 4Debentures Preference share ReservesDebenture is a type of debt instrument not secured by collateral (only backed by credit worthiness and reputation)
Shares of a company's stock with dividends that are paid out before common share dividends are paid.
Any part of shareholders equity apart from basic share capital - 5Investment ratios Dividend yield Dividend cover EPS Price Earnings Ratio Interest coverDividend yield = Dividend per share price/share price
Dividend cover=Profit after tax minus preference dividends/ordinary dividends
EPS=Profit after tax - preference dividends/number of ordinary shares
Relates EPS to market price= share price/EPS
Interest cover= profits before interest and tax/loan interest - 6Share premiumThe amount of money paid per share above par
- 7Balance sheet equationStockholders Equity= Capital + Retained Earnings
Retained Earnings= Prior retained earning+net income-dividends
net income=revenues-expenses
Assets=Liabilities+capital+prior retained earnings+revenues - expenses - dividends - 8Balance sheet 1) Assets 2) Liabilities1) NC Assets:
Tangible and intangible assets
CA (benefits within next year): cash, accounts receivable + inventory + prepaid assets
2) C Liabilities: bank borrowings + accounts payable + deferred revenues and other non-cash
NC Liabilities: bank borrowings and bonds; other types of liabilities (deferred taxes, pensions)
3) Stockholders equity: contributed capital, share premium, retained earnings
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- Quantatative methods Flashcards on Accounting flashcards, created by Yana Atkinson on 22/12/2016.
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- Yana Atkinson
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