BUSS3 Formula...

1. Liquidity ratio
2. A current ratio between 2 and 3 is ideal
3. Less than 2 may have liquidity problems more than 2 means has too much money in current assets - opportunity cost.
4. Current Assets / Current liabilities

1. Liquidity ratio
2. Is a tougher test to see business ability to pay bills.
3. Depends on business a figure less than one would highlight serious problem
4. (Current Assets - Stock)/ Current liabilities

1. Profitability Ratio
2. Higher the figure the better!
3. Only shows profit before overhead costs have been taken.
4. (Gross Profit/Sales Revenue) X 100

1. Profitability Ratio
2. (Operating Profit/ Sales Revenue) X 100
3. Highest possible % is preffered here.
4. If the % is decreasing the expenses for firm have increased.

Annotations:

• Return on Capital Employed

1. (Operating profit/Capital employed) X 100
2. Profitability Ratio
3. Figure needs to be as high as possible
4. A low figure could deter investors