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Flashcards do conjunto (12)
- 1return on equity net profit --------------------------------x 100 =% owners equity *Return on Equity
definition: the return on equity measures the return on the owners investment in the business.
the higher the result the better. - 2net profit margin profit -----------------------------------x100 =% net salesNet Profit Margin
definition: the net profit margin measures the number of cents in every dollar of net profit that the business retains as net profit.
The higher the result the better for the business - 3gross profit margin gross profit ----------------------------------x 100 = % net salesGross profit margin
definition: the gross profit margin measures the return of profit made from the buying and selling of goods and looks at the mar up of the good we are selling.
The higher the result the better - 4return on total assets net profit + interest expense -------------------------------------x 100 = % total assets*return on total assets
definition: the return on total assets ratio measures how well the business is using its assets to generate profit for the business.
the higher the better - 5expense ratios individual expense ------------------------------------x 100 = % net salesexpense ratios
definition: the expense ratio measures the impact each individual expense has on the sales of the business.
lower the result the better because the expense has less of an effect. - 6working capital ratio current assets ----------------------------- = (result:1) current liabilitiesworking capital ratio
definition: the working capital ration measures the ability of the business to pay back its debs within 12 months.
a result of 1-2:1 is considered a good result. - 7quick asset ratio current assets - stock ---------------------------------- = (result:1) current liabilitiesquick assets ratio
definition: the quick assets ratio measures the ability of the business to pay back its short term debs within 30-90 days.
a result of 1-2:1 is considered a good result. - 8debtors turnover net credit sales ------------------------------- = div by 365=no.days debtorsdebtors turnover
definition: the debtors turnover ratio measures how much time it takes for debtors to repay their debts.
7-30 days is a good result - 9inventory turnover COGS ------------------------------- = div by 365=no.days inventory*inventory turnover
definition: the inventory turnover measures how many times in one year the businesses current level of stock is sold.
the lower the result the better - 10solvency ratios total liabilities -----------------------=% total assetssolvency ratios
definition: the total debt/total asset ratio measures the gearing of the business by looking at the percentage of assets that are financed by external parties.
the lower percentage the better. - 11times interest earned net profit + interest expense --------------------------------------- = times interest expensetimes interest earned
definition: the times interest earned ratio measures the ability of the business to repay the interest on existing loans.
the higher the ratio the better. - 12debt/equity ratio total liabilities ---------------------- = % owners equitydebt/equity ratio
definition: the debt/equity ratio measures the percentage of external finance compared to internal finance. ( how much the business relies on external finance to operate)
lower the better
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- FlashCards sobre flash cards, criado por luca dini em 16-05-2018.
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