- G.P Margin = Gross Profit / sales x 100
- N.P Margin = Net Profit / sales x 100
- ROCE = Operating profit / capital employed x 100
- These ratios provide a picture of the profitability and effiency of the business.
- Stock Turnover= Stock / Sales x 365 days
- Debt Turnover= Debtors / Sales x 365 days
- Asset Turnover= Sales / Net Assets
- These ratios tell a business how well they are managing their resources.
- Current Ratio= Current Assets / Current liabilities
- Acid Test Ratio= Current Assets -Stock / Current liabilities
- These ratios focus on the short-term financial health of a business.
- Gearing Ratio= long-term loans / Capital employed x 100%
- These ratios focus on the long-term finances of a business.
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Cost and Revenue
- Total Cost= Fixed Cost + Variable Cost
- Used by the business to see how much finance is required for each level of output.
- Average Cost= Total Cost / Total Output
- This can be used to establishe the basic price level by adding a suitable mark-up.
- Contribution= Price - Marginal Cost
- Marginal Cost: It the extra cost incurred in producing one more unit of output.
- Total Revenue= Price x Quantity Sold
- Is the amount of money a business receives from selling its products.
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- ARR : Average annual profit/ Initial capital cost x 100
- Average annual Profit: Total profit / No. of Years
- Forecasted Net Cash Flow: Forecasted cash inflow (Annual Revenue) - Forcasted cash outflow (Annual operating costs)
- Payback Period: Additional Cash Inflow Needed / Annual cash flow x 12
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- Earnings per share (EPS)= N.P after tax / No. of ordinary shares
- Price/ Earning ratio (P/E)= Market Price / EPS
- Dividend yield ratio= Dividend per share / Market Share Price x 100
- Return on Equity %= Profit after tax, interest and preference dividends x100/ Share Holders funds
- Stock Turnover Ratio= Costs of goods sold / Average stock Holding
- Debtor Day Ratio= Debtors/ Sale Turnover x 3
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