Ratios needed to know for the BUSS3 exam

All of the ratios needed for the BUSS3 exam

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RATIO'S
CURRENT RATIO (Current assets ÷ Current liabilities) : 1
Looks at the solvency of a business. Perfect between 1.5 and 2.0
ACID TEST RATIO [ (Current assetsstock)÷Current liabilities ] : 1
Assumes business cannot sell stock. Ideally it would be 1:1
NET PROFIT MARGIN (Profit ÷ Turnover) x 100%
Shows on average how much % profit for each piece of stock sold
RETURN ON CAPITOL EMPLOYED (Net profit ÷ Capitol employed) x 100%
where capitol employed = Total company equity + Non current liabilities)
Best figure between 20 and 30% helps to see how much of money is being spent compared to what we
already have
GEARING RATIO [Non current liabilities ÷ (Total equity + Non current liabilities)] x
100%
Shows where the money has come from (stockholders or loans from the bank)
ASSET TURNOVER (Turnover ÷ Net assets) : 1
Compares your assets to your turnover ­ the higher the ratio the better
INVENTORY RATIO (Cost of sales ÷ Stock)
Answer shows how many times the stock is turned over in a year ­ the higher number the
better
CREDITOR DAYS (Payables ÷ Cost of sales) x 365
Shows how many days on average you have to wait before you must pay your creditors back
DEBTOR DAYS (Receivables ÷ Revenue) x 365
Shows how many days on average you have to wait until your debtors pay you back what they owe ­ you
want this to be lower than creditor days
DIVIDEND PER SHARE (Total dividends ÷ No. of issued shares)
Shows how much you get back for each share you own
DIVIDEND YIELD (Earning per share ÷ Price of share) x 100%
Shows the % you get back on your share ­ if this is higher than the current interest rate then you made
a good investment. Shareholders want a high %.

Comments

Harry

Any idea which one are not included at the front of the paper?

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