Business Studies

4 Ratios review

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  • Created by: dansydes
  • Created on: 13-12-11 16:37

Profit Margin

Gross Profit Margin= Gross Profit/ Sales Rev

Net Profit Margin= Net Profit/ Sales Rev

Example of Net profit margin=

Sales: $150,000

Net Profit: $75,000

Net Profit Margin: 75,000 / 150,000 = 0.5

= $0.50 per $1 sales

1 of 4

Return on capitol Employed

(Net profit * 100) / capitol employed

capitol employed= 600

Net profit= 1200

(1200*100) / 600 = 0.67%

2 of 4

Working Capitol as Ratio

Working Capitol = Current Assets : Current Liabilities

For Example.... $10,000 Current Assets and $5,000 Current liabilities

= 10:5

= 2:1

3 of 4

Acid Test Ratio

*Note: Does not include stock*

Example:

Debtors= $50, Cash= $50, CL= $30

Acid Test Ratio = (Bebtors+Cash) : Current Liabilities

                         = (50+50) : 30

                         = 100:30

                         = 10:3

4 of 4

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