Business Studies - Finance

The net profit margin shows how much capital a business gets to keep as profit for every £1 they recieve from sales.

Net Profit divide by Turnover times 100

e.g. Unilever's net profit margin was 5285 divide by 40523 times 100 = 12.9%

Current ratio shows whether a business has enough assets to pay off its debts over the next 12months.

Current Assets divide by Current Liabilities

e.g. Unilever's current ratio for 2008 was 11175 divide by 13800 = 0.81:1

Return On Capital Employed shows how much money a business will get back for the capital employed.

Net Profit divide by Total Capital Employed times 100

e.g. Unilever's ROCE for 2008 was:

5285 divide by 22342 times 100 = 23.4%

Gross Profit shows the profit a business makes before deducting overheads.

Turnover minus Cost Of Sales

e.g. Unilever's Gross Profit for 2008 was 40523 minus 21342 = 19181

Net Current Assets / Working Capital shows if there is an excess of current assets over current liabilities.

Current Assets minus Current Liabilities

e.g. Unilever's Net Currents Assets / Working Capital for 2008 was 11175 minus 13800 = -(2625)