Flashcards
Ratio Analysis
Flashcards do conjunto (21)
- 1Operating Profit Margin (Calculation)Operating Profit
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Revenue
x 100 - 2Gross Profit Margin (Calculation)Gross Profit
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Revenue
x 100 - 3Net Profit Margin (Calculation)Profit for the year
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Revenue
x 100 - 4Current Ratio (Calculation)Current Assets
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Current Liabilities - 5Acid Test Ratio (Calculation)(Current Assets - Inventories)
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Current Liabilities - 6Inventory Days (Calculation)Inventory
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Cost of Sales
x 365 (days) - 7Inventory Turnover (Calculation)Cost of Sales
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Inventory - 8The Cash Conversion Cycle (Calculation)Inventory Days + Receivable Days
- Payable Days - 9Gearing (Calculation)Debt
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Equity - 10Interest Cover (Calculation)Operating Profit
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Interest - 11What does the Gross Profit Margin show?This is the proportion of money left over from revenues after accounting for the cost of goods sold
Increase = variable costs aren't rising as quickly as selling prices - 12What is the Operating Profit Margin?This differs from the Gross Profit Margin in that selling, expenses and depreciation are deducted.
- 13What does the Net Profit Margin show?This shows the overall profitability of the business (including all costs)
- 14What does the Current Ratio show?If Current Assets > Current Liabilities = Easier to meet their short-term obligations as and when they fall due
Higher Ratio = Greater Liquidity - 15What does the Quick Ratio show?This shows how easily a company can meet its current obligations using funds raised from quick assets (the assets which can be turned into cash quickly)
- 16What does the Inventory Days Ratio show?How long a business is holding its inventory
Higher days might indicate holding of obsolete or unsaleable inventory - 17What does the Trade Receivable Days Ratio show?Shows how effective a business is at collecting their debts
- 18What does the Trade Payables Ratio show?Shows the length of credit a company is taking
Increase might indicate more reliance on payable to finance the business - 19What does the Cash Conversion Cycle show?This is the length of time between paying for the raw materials and receiving the cash from the sale of goods
- 20What does the Gearing Ratio show?Shows the proportion of assets invested in a snugness that are financed by long-term borrowing
An increase in the gearing ratio indicates that either borrowings are increasing faster than equity, or equity is falling more quickly than borrowings. - 21What does Interest Cover show?This shows how easily a company can pay interest expenses on outstanding debt
Informações
- Descrição
- Accounting and Finance FlashCards sobre Ratio Analysis, criado por Libbie Davies em 29-12-2016.
- Criado por
- Libbie Davies
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