GP MARGIN=Gp : turnover x 100
*for every one pound of sales the business makes (x) of Gp.
NP MARGIN=Np : turnover x 100
*for every one pound of sales the business makes (x) of Np.
ROCE= Np : Capital employed x 100
*for every one pound of sales the shareholders make (x) of Np.
*Capital empleyed= share capital+reteined profit+reserves
Profit and Loss Accounts
GROSS PROFIT= sales revenue-cost of sales
*cost of sales=openingstock-closingstock+directcosts
NET PROFIT= gross profit+other income-expenses
*other expenses=(undirect costs, fixed costsand overheads)
(rent, advertising, other wages payed by the business)
RETAINED PRFIT=net profit-taxes-dividends
*dividends=(profits paid to the shareholders)
- This is what the business ows and owns. Includes assetas and liabilities.
NET ASSETS=total assets-long term liabilities
*long term liabilities= what the business ows in a year
TOTAL ASSETS=net current assets+fixed assets
*fixed assets=lands, buildings, electricity..
NET CURRENT ASSETS=current assets-current liabilities
*current=(short term) less than one year
*current assets=Stock, Debtos and Cash
*current liabilities=everithing the business owes in a year (short term)
CURRENT RATIO=Current assets : Current liabilities
*The ability to pay short term debths. A result less than 1.5 would mean that the business would have cash flow problems.
ACID TEST=(Current assets-stocks) : current liabilities
*The ratio should be arround 1. less than 1 would mean that the business could not pay the short term debths from current assets.
STOCK TURN OVER=Cost of sales : stocks
*Measures how many times ina a finantial year the business is able to stock into sales.